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UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


THE    FINANCES 
OF    NEW    YORK    CrFY 


^^^^ 


THE    FINANCES 
OF   NEW   YORK   CITY 


BY 


EDWARD    DANA    DURAND,   Ph.D. 

Late  Legislative  Librarian  in  the  New  Yoric  State  Library, 

Assistant  Professor  of  Economics  and  Administration, 

Leland  Stanford,  Jr.,  University 


Weto  Hark 
THE    MACMILLAN    COMPANY 

LONDON:   MACMILLAN  &  CO.,  Ltd. 
1898 

All  rights  reserved 


Copyright,  1898, 
By  the  MACMILLAN  COMPANY. 


NortoaoS  ^rtsa 

J.  S.  Cushing  &  Co.  —  Berwick  &  Smith 
Norwood  Mas8.  U.S.A. 


ERRATUM. 

On  page  336,  line  18,  instead  of  "two  or  three"  read 
"  twelve  or  thirteen." 


H3 


PREFACE 

At  first  glance  the  subject  of  the  finances  of 
New  York  city  may  appear  a  narrow  one,  scarcely 
deserving  extensive  treatment.  As  a  matter  of 
fact,  however,  very  little  work  has  yet  been  done 
in  this  country  in  the  study  of  municipal  finance  — 
indeed  only  recently  has  there  awakened  interest 
in  the  general  subject  of  city  government  —  and 
some  detailed  investigation  of  the  finances  of  indi- 
vidual cities  is  necessary  as  a  basis  for  more  com- 
prehensive discussion.  The  accounts  kept  by  our 
American  municipalities  are  so  complicated  and 
differ  so  greatly  among  themselves  that  a  compara- 
tive study  cannot  be  made  off-hand.  Moreover,  if 
mere  magnitude  of  sums  involved  makes  a  subject 
important.  New  York's  finances  are  entitled  to 
careful  consideration  on  this  score.  The  yearly 
expenditures  of  all  classes  in  the  consolidated  me- 
tropolis will  be  more  than  five  times  greater  than 
those  of  the  state  of  New  York,  nearly  two-thirds 
as  great  as  those  of  all  the  states  in  the  Union 


215148 


VI  PREFACE 

combined,  and  more  than  a  seventh  as  great  as 
those  of  the  Federal  government,  while  the  gross 
debt  of  Greater  New  York  will  exceed  that  of  all 
the  American  states.  And  finally  it  is  evident 
that  the  management  of  the  finances  touches  inti- 
mately every  other  phase  of  the  municipal  ad- 
ministration, and  that,  if  we  consider  the  subject 
broadly  in  its  relations  to  the  general  city  govern- 
ment and  in  its  actual  working,  we  shall  come 
very  close  to  the  core  of  some  of  those  practical 
problems  which  are  to-day  arousing  such  wide- 
spread interest.  It  is  certainly  true  that  a  more 
thorough  understanding  of  the  financial  system 
on  the  part  of  New  York's  citizens  and  officials 
is  highly  desirable.  Such  an  understanding  might 
well  lead  to  a  change  in  some  of  the  present  com- 
plicated and  anomalous  features  of  the  finances,  as 
well  as  to  greater  economy  and  responsibility  in 
the  general  administration. 

The  official  records  on  which,  in  almost  every 
case,  the  chief  financial  statements  of  fact  in  the 
following  pages  are  based,  are  often  so  unsatisfac- 
tory, and  the  system  of  accounting  has  been  so 
different  at  different  periods,  that  I  can  hardly 
hope  to  have  escaped  errors  altogether.  For  the 
year    1896  the  comptroller's  report    had   not  yet 


PREFACE  ■  vii 

appeared  at  the  time  of  going  to  press,  and  nearly 
all  figures  for  that  year  are  taken  from  manuscript 
records  in  the  ofifice  of  the  finance  department. 
For  the  convenience  of  those  not  having  access  to 
full  sets  of  documents  who  may  care  to  verify  facts 
or  figures,  it  may  be  said  that  the  same  state- 
ments are  often  found  in  several  different  sources. 
The  city  Manuals  from  1850  to  1870  copy  some 
of  the  more  important  tables  of  the  comptrollers' 
reports;  since  1873  the  proceedings  of  the  alder- 
men, of  the  board  of  estimate  and  apportionment, 
and  many  other  documents  have  been  printed  sepa- 
rately as  well  as  in  the  City  Record,  to  which  latter 
publication  reference  is  usually  made.  Recent 
comptrollers'  reports,  moreover,  contain  compara- 
tive tables  on  many  subjects,  running  back  either 
ten  or  twenty-five  years. 

Notwithstanding  the  great  financial  importance 
of  the  consolidation  of  Greater  New  York,  which 
is  being  effected  as  this  book  leaves  the  press,  I 
have  not  deemed  it  necessary  to  enter  into  detailed 
study  of  the  financial  history  or  conditions  of 
Brooklyn  and  the  smaller  united  municipalities. 
Their  experience  has  had  little  influence  in  the 
framing  of  the  new  charter,  which  follows  mostly 
the    previous    laws    regarding    New    York    itself, 


vm  PREFACE  • 

while  an  attempt  to  combine  their  financial  statis- 
tics with  those  of  New  York  would  only  produce 
confusion,  owing  to  the  different  conditions  and 
different  methods  employed.  The  present  tense 
is  usually  used  in  speaking  of  the  charter  provi- 
sions existing  in  1897,  the  future  of  those  of  the 
charter  going  into  effect  January   i,    1898. 

Thanks  are  due  to  Dr.  Albert  Shaw  for  sugges- 
tions, and  to  Prof.  J.  W.  Jenks  and  Prof.  C.  H. 
Hull  for  careful  criticism  of  the  text  throughout. 
I  am  also  under  obligation  to  the  officials  in  the 
city  hall  and  comptroller's  office,  who  have  given 
free  access  to  the  records  as  well  as  direct  informa- 
tion and  suggestion.  Mr.  Isaac  S.  Barrett,  general 
book-keeper,  has  rendered  specially  useful  assist- 
ance. 

E.  D.  D. 

DECEMBER,    1897. 


CONTENTS 
Part  I 

HISTORY   OF   THE   FINANCES    TO  187 1 
CHAPTER   I 

PAGE 

Introduction i 

§  I.    General  survey  of  history        .....         I 

CHAPTER   II 


The  Early  City,  165 2- 1830 

§  2.   The  Dutch  city       .... 

§  3.   The  Enghsh  charters 

§  4.   The  finances,  1665-1783 

§  5.   The  tax  laws  and  finances,  1 784-1 830 

§  6.   The  city  debt  .... 

§  7.    General  character  of  the  government 

CHAPTER   III 


7 
7 

13 
17 
25 
32 
37 


Council  Govern.ment  under  the  Charter  of  1830        .  41 

§  8.   The  charter  of  1830 41 

§  9.    The  budget 46 

§  10.   The  city  debt 51 

§  II.    Special  assessments         ......  58 

§  12.    General  cliaracter  of  the  period.     Conclusion          .  59 


X  CONTENTS 

CHAPTER  IV 

The  Period  of  Legislative  Interference,  1850-1865 

§  13.  The  charter  of  1849         ..... 

§  14.  The  charter  amendments  of  1853   . 

§  15.  Charter  changes  of  1857,  etc. 

§  16.  The  budget  and  the  independent  departments 

§  17.  Legislative  interference  in  the  budget     . 

§  18.  The  city  debt 

§  19.  Special  assessments,  taxes,  and  accounts 

§  20.  General  progress  of  expenditures    . 

§21.  General  character  of  government.     Conclusion 

CHAPTER   V 


The  Tweed  Ring 

§  22.  Origin  and  growth  of  the  Ring  to  1870  . 

§  23.  The  charter  and  other  laws  of  1870 

§  24.  Events  of  1871.     The  'two  per  cent  law' 

§  25.  Fall  of  the  Ring 

§  26.  General  character  of  Ring  financial  management 

§  27.  Special  assessments         ..... 

§  28.  The  city  debt 

§  29.  Finances  during  the  period  of  reconstruction 


PAGE 

66 
67 
70 
76 
80 
88 

97 
107 
112 
114 


119 
120 

125 
129 

134 
137 
142 

150 


Part  II 

PRESENT    WORKING    OF   THE   FINANCIAL 
SYSTEM 

CHAPTER   VI 

Introduction 

§  30.    Adoption  and  character  of  charter  of  1873 
§  31.    Charter  changes  since  1873    .... 
§  32.   The  Greater  New  York  charter 
§  33.    Outline  of  financial  system  and  plan  of  study  . 
§  34.    Preliminary  view  of  receipts  and  expenditures 


154 
154 
163 
166 
172 
177 


CONTENTS  xi 


CHAPTER   VII 

PAGE 

Assessment  and  Taxation 187 

§35.  Outline  of  the  tax  system  .  .  .  .  .187 
§  36.  Practical  character  of  tax  assessments  .  ,  .190 
§37.   Collection  of  taxes  ......     198 

CHAPTER   VIII 

Special  Assessments 201 

§  38.  Changes  in  the  system  since  1871  ....  20I 
§  39.    Assessment  procedure     ......     213 

CHAPTER   IX 

City  Property  and  Franchises 221 

§  40.    General  character  and  importance  .         .  .  221 

§  41.   City  property  —  its  management  and  revenues        .  224 

§  42.   Municipal  franchises       ......  230 


CHAPTER   X 

The  Budget  and  City  Expenditures 
§  43.  Outline  of  the  budget  system 
§  44.    Powerlessness  of  the  city   council.     Fixed  appro 

priations    ....... 

§  45.    Procedure  of  the  board  of  estimate  and  apportion 

ment  ....... 

§  46.    Character  and  motives  of  the  board 

§  47.    The  budget  system  of  Greater  New  York 

§  48.   The  Tilden  Commission  plan 

§  49.    Analysis  of  city  expenditures  .... 

§50.    Growth  of  expenditures  since  1871 

CHAPTER    XI 


253 

253 

258 

264 
269 
277 
281 
285 
289 


The  City  Dkbt 295 

^^§51.    Constitutional  limitation  of  debt     ....     296 
^     _§  52.    Legislative  and  local  authorization  of  debt     .  300 


XU  CONTENTS 


§53.  Debt  redemption  —  act  of  1878 

§  54.  Debt  redemption  under  present  laws 

§  55.  General  progress  of  the  debt  since  1871 

§  56.  Chief  bond  issues  since  1871  . 

§  57.  Present  state  of  debt;   effect  of  consolidation 

§  58.  The  sinking  fund  and  future  debt  issues 

CHAPTER   XII 


PAGE 
306 

325 


Audit,  Account,  and  Financial  Responsibility       .        .  345 

/    §  59.   Auditing  and  accounting  system     ....  345 

<      .§  60.    Financial  records  and  reports  ....  349 

'     §61.   Inspection  of  accounts  and  official  responsibility    .  352 

§  62.  Conclusion 359 

Table  of  Works  Cited 365 


Tables 

I.   Appropriations  and  Taxation,  1830-1896 
II.   The  City  Debt,  1830-1896        .... 

III.  Expenditures  by  Decennial  Periods,  1830- 1890 

IV.  Modifications  in  the  Budget  Estimates,  1874-1897 
V.    Summary  of  Debt  Issues,  1812-1896 

Diagrams 

A.  Appropriations,  Taxation,  and  Special  Assessments 

B.  The  City  Debt 

C.  Fixed  and  Contingent  Appropriations,  1874- 1 896 

D.  Chief  Heads  of  Appropriations,  1 874- 1 896 

E.  Index  Numbers  of  Appropriations,  1876,  '86,  '96 


372 
374 
376 
378 
379 


380 
381 
382 

383 
384 


Index 385 


PART   I 

HISTORY  OF  THE   FINANCES    TO    1871 
CHAPTER   I 

INTRODUCTION 

§  I.    General  Survey  of  History. 

In  studying  the  history  of  the  finances  of  New 
York  city,  it  is  necessary  to  pay  considerable 
attention  to  the  development  of  the  general  muni- 
cipal organization,  which  constantly  reacts  upon 
the  financial  management.  In  fact,  the  four  main 
periods  in  the  history  of  the  city  government  will 
furnish  us  the  best  lines  of  division  for  considering 
the  finances.  These  periods  may  be  roughly 
described  by  the  following  titles:  — 

1.  The  early  city — 1652-1830; 

2.  Council  government  under  the  charter  of  1830 

—  1 830- 1 849; 

3.  The   period   of   independent    executive   depart- 

ments and  of  legislative  interference —  1849- 
1869; 

4.  The  Tweed  Ring —  1 869-1 871  ; 

5.  The  modern  period —  1871-1897. 


2  INTR  OD  UC  TION 

I.  It  was  in  1652  that  the  city  of  New  Amster- 
dam received  its  charter  from  the  Dutch  West 
India  Company.  During  the  succeeding  thirteen 
years  of  Dutch  rule,  the  city  burgomasters  and 
schepens  were  involved  in  a  constant  struggle 
with  the  company's  director,  Stuyvesant,  for  inde- 
pendent authority,  and  especially  for  municipal 
revenues.  They  disliked  to  levy  direct  taxes  and 
sought  to  secure  various  duties,  fees,  and  property 
rights  from  the  company.  Citizens  were  called 
upon  to  perform  many  public  services  directly, 
while  special  assessments  were  also  laid  for  the 
cost  of  local  improvements. 

Under  the  English  rule  which  followed,  the 
government  was  reorganized  into  something  ap- 
proaching its  present  form.  More  liberal  grants 
of  indirect  revenues  were  made  to  the  city,  espe- 
cially by  the  Dongan  charter  of  1686,  and  these 
long  sufficed  to  cover  the  meagre  ordinary  outlay, 
although  occasionally  for  reducing  the  floating 
debt  or  for  extraordinary  purposes  a  property  tax 
was  levied,  under  special  authority  from  the  pro- 
vincial legislature.  About  the  middle  of  the 
eighteenth  century,  however,  it  became  necessary 
to  levy  taxes  almost  yearly,  but  by  force  of  custom 
special  sanction  of  law  was  still  required,  and 
when  the  state  government  was  established  after 
the  Revolution,  this  requirement  was  continued. 
During  the  early  period,  however,  the  legislature 
did  not  abuse  its  control;  in  fact,  its  action  was 


GENERAL   SURVEY   OF  HISTORY  3 

almost  purely  formal,  and  the  council  was  really 
the  sole  power  in  financial  management.  The  sys- 
tem of  finance  was  still  crude  and  irregular.  In 
particular  there  was  considerable  carelessness  in 
creating  floating  debt,  and  it  was  chiefly  to  fund  this 
that  permanent  debt  was  first  incurred,  in  18 12. 

2.  In  1830  the  first  considerable  modifications 
in  the  city  charter  were  made,  as  the  result  of  the 
work  of  a  municipal  convention.  Influenced  by 
the  precedent  of  national  and  state  governments, 
the  convention  proposed  to  draw  a  sharp  line 
between  executive  and  legislative  functions,  trans- 
ferring the  former  from  committees  of  the  council 
to  independent  departments  appointed  by  the 
council.  In  connection  with  this  change  the 
system  of  annual  appropriations  was  introduced. 
The  city  council,  however,  failed  to  carry  out  the 
spirit  of  the  rather  indefinite  charter,  and  its  com- 
mittees continued  to  dictate  executive  business, 
while  the  management  of  the  appropriations  was 
so  loose  that  they  served  to  place  practically  very 
little  restriction  on  expenditure.  The  city  council 
was  growing  decidedly  corrupt,  and  partisan 
motives  influenced  it  largely.  Perhaps  the  most 
important  financial  event  in  this  period  was  the 
construction  of  the  Croton  aqueduct,  which  swelled 
the  city  debt  to  a  high  figure. 

3.  Growing  dissatisfaction  with  the  council  gov- 
ernment led  at  last  to  the  passage  of  the  charter 
of  1849,  which  actually  accomplished  the  removal 


4  INTRODUCTION 

of  executive  power  from  the  council,  and  its  trans- 
fer to  independent  departments.  Considerable 
charter  amendments  were  also  made  in  1853  and 
1857.  About  the  latter  year  the  legislature  began 
extensively  the  policy  which  prevailed  throughout 
the  remainder  of  this  period,  of  actively  interfering 
in  the  management  of  city  affairs.  Not  only  were 
several  very  important  departments  placed  under 
commissions  appointed  by  the  state  government, 
but  the  city  and  county  organizations  were  sepa- 
rated, and  the  latter  so  constituted  as  to  be  largely 
in  sympathy  with  the  dominant  party  in  the  state. 
Above  all,  this  interference  was  exercised  by  means 
of  the  annual  tax  laws,  which  had  persisted  from 
the  early  days.  The  details  of  city  expenditure 
came  now  to  be  prescribed  in  these  acts,  and  local 
wishes  were  almost  absolutely  disregarder'  in  fix- 
ing the  sums  allowed.  The  motive  of  this  general 
policy  was  to  give  the  Republicans  and  Unionists 
in  the  outside  state  control  of  the  city,  instead  of 
leaving  it  to  the  disloyal  and  largely  corrupt  ma- 
jority in  the  metropolis.  The  city  council  and 
other  officers  actually  chosen  by  the  local  voters 
grew  constantly  worse  and  worse.  After  the  w.ir, 
moreover,  the  independent  departments  and  tlie 
state  legislature  gradually  became  corrupt,  an  1 
the  way  soon  lay  open  for  the  entry  of  the  Tweei 
Ring  upon  the  field. 

4.    As  soon  as  this  immensely  powerful  circle  ot 
conspirators  had  gained  the   complete  ascendant, 


GENERAL   SURVEY   OF  HISTORY  5 

they  sought  to  perpetuate  their  power  by  securing 
a  new  city  charter.  This  law,  which  introduced 
many  features  that  still  persist  in  the  government 
of  New  York,  did  away  with  state  commissions 
and  with  legislative  interference  in  the  appropria- 
tions. It  did  not,  however,  increase  the  power  of 
the  degenerate  common  council,  but  parcelled  out 
authority  among  well-nigh  autocratic  departments 
headed  by  commissions.  The  control  of  expen- 
ditures was  placed  in  the  hands  of  a  '  board  of 
estimate  and  apportionment '  composed  of  four 
executive  officers,  who  were  at  this  time  precisely 
the  four  chiefs  of  the  Ring.  To  this  body  was 
also  given  power  to  '  audit '  many  classes  of  claims 
and  to  issue  bonds,  and  it  was  by  virtue  of  its  ac- 
tion that  a  large  proportion  of  the  enormous  addi- 
tions to  the  city  debt  during  the  few  years  of  Ring 
rule  were  made.  Such  gigantic  corruption  as  that 
which  prevailed  in  1870  and  1871  is  unparalleled 
in  the  history  of  any  city. 

5.  The  Tweed  Ring  was  finally  overthrown  by 
a  general  popular  uprising  in  September,  1871. 
An  attempt  was  now  made  to  secure  a  new  charter 
practically  reestablishing  that  domination  of  the 
city  council  which  had  prevailed  before  1850,  but 
the  proposed  bill  was  defeated,  and  as  public  feel- 
ing subsided  a  law  was  finally  adopted  which  did 
not  depart  radically  from  the  Tweed  charter. 
Under  this  law,  which,  with  some  amendments,  is 
still  in  force,  the  council  has  become  less  and  less 


6  INTRODUCTION 

a.  significant  factor  in  the  government.  The  mayor 
has  gradually  centred  large  power  in  himself, 
while  the  board  of  estimate  and  apportionment, 
somewhat  changed  in  composition,  by  its  control 
of  expenditures  and  by  the  power  in  debt  manage- 
ment and  in  other  directions  that  has  been  conferred 
upon  it,  has  likewise  gained  largely  in  authority. 
The  state  government  has  still  retained  a  consider- 
able degree  of  control.  The  Greater  New  York 
charter,  which  goes  into  effect  January  i,  1898, 
seeks  to  make  some  important  changes  in  the 
frame  of  government,  and  especially  to  give  greater 
autonomy  to  the  city,  but  it  is  questionable  whether 
it  will  accomplish  all  that  its  authors  have  antici- 
pated. 

The  first  four  periods  above  outlined  will  each 
be  made  the  subject  of  a  separate  chapter.  The 
character  and  working  of  the  financial  system  in 
the  period  since  1871  will,  however,  require  more 
minute  study,  and  Part  II  is  devoted  to  this  subject. 
The  financial  tables  and  diagrams  at  the  end  of  the 
book  will  be  found  useful  in  connection  with  the 
text. 


CHAPTER   II 

THE    EARLY    CITY —  1652-183O 

§  2.    TJie  DutcJi  City. 

The  beginnings  of  New  York  city  government 
carry  us  back  to  a  time  when  the  conception  of 
a  municipality  was  considerably  different  from  the 
one  now  most  common.  An  old-world  town  of 
those  days  came  very  much  closer  to  the  every-day 
life  and  business  of  its  citizens  than  does  a  modern 
city.  Its  charter,  granted  —  often  not  over  gra- 
ciously —  by  the  sovereign  or  feudal  lord,  freed  it 
from  many  of  the  burdens  imposed  on  other  parts 
of  the  community ;  and  conferred  upon  it,  along 
with  political  and  judicial  powers,  special  business 
privileges  and  a  marked  degree  of  authority  over 
the  industry  and  commerce  of  its  inhabitants  and 
of  the  neighborhood.  The  bestowal  of  lands  and 
other  property  rights,  and  of  power  to  levy  all 
sorts  of  indirect  taxes,  tolls,  and  dues,  assured  the 
municipality  an  income.  The  city  was  a  close 
corporation,  and  the  conditions  of  entrance  to  its 
full  citizenship  were  frequently  severe ;  while  to 
the  '  freemen  '  were  restricted  many  of  what  are 
now  often  considered  natural  rights.  Practically 
only  they  could  engage  in  any  craft  or  business. 

7 


8  THE   EARLY   CITY— 1632-1830 

They  were  exempt  from  many  charges  that  were 
exacted  from  their  less  fortunate  fellow-townsmen 
and  from  outsiders;  and  they  alone  enjoyed  the 
privileges  of  the  common  property.  The  influence 
of  this  system  of  city  government  ^  has  left  traces 
upon  the  administration  and  finances  of  New  York 
which  are  not  found  in  American  cities  of  more 
recent  origin. 

The  fact  that  New  Amsterdam  was  originally 
the  colony  of  a  private  corporation,  bent  upon  its 
own  pecuniary  gain,  for  a  time  modified  the  appli- 
cation of  European  municipal  precedents  materi- 
ally.^ Despite  frequent  demands,  no  form  of  local 
self-government  was  granted  by  the  West  India 
Company  to  the  town  till  1652,  and  then  the  impe- 
rious Director-General  Stuyvesant  insisted  upon 
retaining  the  appointment  of  the  two  burgomasters 
and  the  five  schepens  in  his  own  hand,  although  a 
year  or  two  later  the  city  fathers  succeeded  in  ob- 
taining the  right  to  nominate  to  him  a  double  num- 
ber of  citizens  for  appointment  as  their  successors. 
Not  a  stiver  of  revenue,  moreover,  could  be  raised 
in  any  way  without  the  director's  consent,  and  con- 

1  What  is  said  here  of  European  cities  generally  was  not  equally 
true  of  all  of  them.  Conditions  differed  widely  in  different  coun- 
tries, and  even  within  the  same  country.  The  best  picture  of  early 
English  town  life  is  in  Mrs.  Green's  Town  Life  in  the  Fifteenth 
Century. 

2  For  fuller  account  of  the  early  relations  between  the  city  and 
the  West  India  company,  see  the  writer's  paper,  The  City  Chest  of 
New  Amsterdam,  in  the  Half-Moon  Series. 


THE  DUTCH  CITY  9 

stant  conflicts  between  him  and  the  city  magistrates 
comprise  most  of  the  financial  history  of  the  Dutch 
municipality.  Stuyvesant,  on  his  part,  hesitated 
to  violate  the  traditions  of  free  Holland  by  levy- 
ing direct  taxes  on  behalf  of  the  company  without 
consent  of  the  people's  representatives ;  and  the 
latter  used  this  fact  as  a  lever  to  extort  from  him 
the  first  of  those  forms  of  indirect  revenue  which 
the  good  burgomasters  and  schepens  so  much  pre- 
ferred to  unpopular  property  taxes.  Almost  im- 
mediately after  the  establishment  of  the  new 
government,  a  considerable  loan  had  been  made 
by  the  director  and  the  municipal  authorities 
jointly  for  the  construction  of  a  wall  and  palisade 
about  the  city.  The  magistrates  thereupon  re- 
fused to  raise  subsidies  to  redeem  the  debt  vmless 
the  revenue  from  the  tavern-keepers'  excise  should 
be  turned  from  the  company's  treasury  into  the 
city  chest.  With  much  grumbling  this  was  finally 
conceded  in  November,  1653,  and  New  Amster- 
dam received  its  first  regular  income.  On  the  fail- 
ure of  the  burgomasters  and  schepens,  however,  not 
only  to  pay  the  debt,  but  even  to  support  the  minis- 
ters whose  salaries  had  been  made  a  charge  upon 
them,  Stuyvesant,  in  the  following  year,  took  away 
again  this  important  revenue.  Meantime,  however, 
the  '  burghers'  excise  '  on  liquors,  of  nearly  equal 
value,  had  been  granted  the  city,  and  this  was  to 
the  close  of  Dutch  rule  the  chief  regular  means  of 
supporting  the  government.     As  was  the  general 


lO  THE   EARLY  CITY— 16S2-1830 

custom  regarding  indirect  charges  in  those  days, 
this  excise  was  farmed  out  to  the  highest  bidder. 
It  brought  4200  florins  in  1657. 

The  old  fortification  debt  of  1653  continued  to 
be  a  bone  of  contention  to  the  end  of  the  Dutch 
period,  and  to  the  end  the  city  fathers  managed, 
by  one  shift  or  another,  to  avoid  paying  it.  To 
be  sure,  they  did  levy  one  tax,  in  1655-6,  specially 
for  repairing  the  fortifications.  This  was  the  near- 
est approach  to  a  modern  property  tax  which  we 
meet  until  the  British  conquest,  and  even  here  an 
attempt  was  made  to  give  it  the  appearance  of  a 
voluntary  contribution,  although  citizens  who  re- 
fused to  give  freely,  or  who  offered  less  than 
seemed  proper,  were  compulsorily  taxed.  No 
formal  assessment  of  property  was  made,  but  the 
magistrates  assigned  roughly  to  each  burgher  what 
they  deemed  his  fair  share  —  ranging  from  4  to 
1 50  florins.  The  total  amount  as  listed  was  6305 
florins.  The  unpopularity  of  the  tax  is  shown  by 
the  extreme  difficulty  in  collecting  it. 

Other  minor  revenues  were  obtained  from  time 
to  time,  with  more  or  less  difficulty,  but  in  spite  of 
these  the  chest  remained  so  chronically  empty 
that  the  city  magistrates  were  even  driven  to  beg 
the  payment  of  their  own  salaries  by  the  company. 
Dues  for  slaughtering  cattle  and  for  marking 
measures  and  barrels,  fees  for  admission  to  the 
burgher-right,  wharfage  charges,  and  special  taxes, 
of   uniform    amount    on    each  household,   for  the 


THE  DUTCH  CITY  II 

rudimentary  fire  protection  and  night-watch,  were 
the  only  recurrent  sources  of  income  aside  from 
the  excise.  The  vast  importance  of  the  present 
system  of  municipal  docks  makes  the  establish- 
ment of  the  first  city  wharf  of  special  interest. 
This  was  in  1658;  the  new  dock  appears  to  have 
adjoined  the  great  bridge  across  the  Heere  GracJit 
or  Grand  Canal.  The  city  was  allowed  to  collect 
eight  stivers  per  last  (about  two  tons)  for  loading 
or  unloading  from  this  wharf.  The  burgomasters 
and  schepens  petitioned  also  repeatedly  for  the 
revenue  from  the  ferry  to  Brooklyn,  then  farmed 
by  the  West  India  Company,  but  it  was  not  till  the 
English  period  that  this  was  conceded  to  the  city. 

The  most  significant  feature  perhaps  of  the 
financial  administration  of  New  Amsterdam  was 
the  reliance  upon  individuals  especially  benefited 
by  public  works.  This  took  two  forms  — the  simple 
one  of  requiring  each  citizen  to  perform  the  work 
from  which  he  was  to  receive  special  advantage, 
and  the  vastly  preferable  one  of  local  assessment 
of  the  cost  of  work  performed  by  the  municipality 
itself.  The  first  method  was  employed  in  1654, 
when  residents  along  the  water-front  were  required 
to  build  a  ScJiocyiiigc  or  sheet-piling  to  protect 
their  lots  ;  in  default  the  city  was  to  build  it  and 
collect  the  cost  from  the  owners.  This  same 
system  was  employed  for  the  paving  of  the  street 
along  the  Prince  Graclit  in  1660,  and  appears  to 
have  been  used  several  times  during  the  years  im- 


12  THE  EARLY   CITY— 1632-1830 

mediately  following;  the  British  capture  in  1664. 
The  method  of  special  assessment  was  introduced 
in  1657  for  the  pavement  of  Bronzvcr  Straate 
(now  Stone  Street),  the  first  street  to  be  paved  in 
New  Amsterdam.  On  petition  of  the  owners,  who 
agreed  to  pay  the  cost,  the  work  was  done  by  two 
overseers  appointed  by  the  city,  who  were  author- 
ized "  to  assess  proportionably  for  the  expense 
incurred  each  house  standing  in  the  aforesaid 
street."^  This  system  was  also  used  in  the  recon- 
struction of  the  Schocyi)igc  along  the  Hccre  Gracht 
in  1660,  when  the  abutting  lots  w'ere  assessed  at 
the  rate  of  40  florins  per  rod.  The  full  list  of 
assessments  is  recorded.  In  this  case  there  was 
no  petition  of  the  property-owners  offering  to  bear 
the  expense ;  indeed,  they  were  apparently  not  even 
warned  that  it  would  be  laid  upon  them.  Accord- 
ingly there  was  a  great  outcry  when  an  attempt  was 
made  to  collect  the  assessment.  Poor  Hendrick 
Willemsen,  the  baker,  whose  tax  was  the  highest 
of  all,  declared  that  he  had  not  only  received  no 
benefit  from  the  work,  but  had  actually  lost  a  lot 
of  valuable  stone  which  had  been  undermined. 
He  vowed  he  would  not  pay,  and  only  after  he 
had  been  conveyed  to  the  prison  chamber  for  an 
hour  or  two  was  he  frightened  into  agreeing  to 
contribute  the  amount  due  in  four  instalments. 
The  privilege   of    defraying  their  assessments  in 

^  Records  of  the  Burgomasters  and  Schepens  (translation),  vol. 
3'  PP-  5.  34- 


THE  EA'GLISH  CHARTERS  1 3 

instalments  was  later  given  to  all  who  chose  to 
ask  it. 

Perhaps  the  difficulty  encountered  in  this  enter- 
prise accounts  for  the  apparent  cessation  of  the 
use  of  local  assessments  hereafter. 

§  3.    The  English  CJiarters. 

In  the  year  after  his  capture  of  New  Amsterdam, 
Colonel  Nicolls,  the  British  governor,  reorganized 
the  city  government  somewhat  on  the  English 
modeV  although  retaining  quite  closely  Dutch 
customs.  Instead  of  two  burgomasters,  a  mayor 
was  constituted,  and  the  five  schepens  became 
aldermen.  The  appointment  of  these  officers,  fol- 
lowing Stuyvesant's  precedent,  was  kept  by  the 
governor,  but  was  still  apparently  from  a  double 
nomination  by  the  city  council.  A  greater  degree 
of  autonomy  than  had  yet  been  enjoyed  was,  how- 
ever, allowed  the  municipality,  and  especially  were 
greater  financial  privileges  given.  Nevertheless, 
the  city  fathers  felt  not  only  that  their  previous 
rights  and  traditions  had  insufficient  protection 
from  encroachment  under  the  exceedingly  brief 
charter  which  Colonel  Nicolls  had  granted,  but 
that  additional  jDowers  and  privileges,  of  both 
political  and  financial  character,  were  needed  to 
give  dignity  and  strength  to  the  growing  munici- 
pality. Accordingly,  upon  the  arrival  of  the  new 
governor,  Thomas   Dongan,  in   1683,  the  citizens 

'  Order  quoted  in  Hoffman,  Estate  and  Rights  of  A^ew  York, 
Appendix,  p.  iii. 


14  THE  EARLY  CITY— 16^2-1830 

made  a  movement  for  a  more  extended  and  formal 
charter ;  ^  and  at  last,  by  aid  of  a  skilful  present 
of  ;^300  to  that  worthy,  who  felt  it  no  unseemly 
thing  to  receive  some  recompense  for  his  trouble 
and  his  benevolence,  they  succeeded  in  obtaining 
the  famous  charter  of  1686.  Additional  property 
rights  were  granted  or  existing  ones  confirmed  by 
Governor  Cornbury  in  the  'charter  of  Queen  Anne' 
in  1708;  while  Governor  Montgomerie  in  1730,  on 
the  petition  of  the  citizens,  gave  the  city  yet  an- 
other general  charter,  confirming  all  the  rights  of 
the  previous  ones,  adding  a  few  others,  and  mak- 
ing some  slight  changes  in  the  frame  of  govern- 
ment. Thereafter  few  important  modifications 
were  made  in  the  organization  of  the  city  down 
to  1830;  indeed  the  general  outlines  of  govern- 
ment, and  not  a  few  details  prescribed  by  these 
early  laws,  still  persist.  The  property  rights  and 
privileges  then  secured  especially  constitute  a  fac- 
tor of  great  consequence  in  the  present  finances. 

The  Dongan  and  Montgomerie  charters^  de- 
clared New  York  a  '  Free  City,'  a  phrase  bor- 
rowed from  European  municipalities ;  yet  the 
independence  which  had  been,  in  fact,  so  firmly 
possessed  by  many  of  the  older  cities  of  Europe 
was  considerably  curtailed.  Indeed  the  charter 
of  1686  was  granted  at  a  time  when  in  England 

1  Petition  in  Hoffman,  Appendix,  p.  v. 

-  Both  these  charters  are  quoted  in  almost  every  edition  of  the 
laws  relating  to  the  city,  in  the  Manuals,  etc. 


THE  ENGLISH   CHARTERS  I  5 

itself  the  Stuart  kings  were  making  marked  en- 
croachments on  the  liberties  of  the  municipalities ; 
when  not  only  were  the  newly  incorporated  cities 
denied  many  privileges  enjoyed  by  the  older  ones, 
but  attempts  were  even  made  to  wrest  from  the 
latter  their  ancient  charters.  Perhaps,  too,  because 
New  York  was  in  a  dependent  colony,  more  con- 
trol over  its  affairs  was  retained  by  the  general 
government,  while  the  influence  of  the  traditions 
of  New  Amsterdam  tended  in  the  same  direction. 
The  mayor  and  recorder  were  appointed  by  the 
governor,  taxes  could  not  be  levied  save  by  special 
authority  of  the  provincial  assembly,  and  the  city 
ordinances  were  binding  for  only  a  year^  unless 
approved  by  the  governor.  However,  the  colonial 
authorities  were  by  no  means  inclined  to  abuse 
this  power  as  the  autocratic  Stuyvesant  had  done. 
The  city  was  at  least  allowed  to  elect  its  own 
councilmen,  and  these  were  empowered  to  regulate 
by  ordinance  many  matters,  such  as  the  number 
and  functions  of  the  various  subordinate  officers, 
over  which  in  the  present  century  the  legislature 
has  arrogated  very  minute  control. 

The  city  council  was  composed  of  seven  alder- 
men, and  seven  assistant  aldermen,  elected  annu- 
ally. These  did  not  constitute  separate  bodies,  but 
met  together,  the  mayor  and  recorder  also  having 
seats  in  the  board.     A  '  chamberlain  or  treasurer,' 

1  Under  the  later  charter;  under  the  Dongan  law  only  three 
months,  §  8. 


1 6  THE   EARLY  CITY— 1632-1830 

elected  by  the  council,  completed  the  number  of 
important  officers. 

The  city  long  continued  to  be  a  close  corpora- 
tion, whose  members  only  could  carry  on  business 
in  the  city  or  upon  the  Hudson  River,  and  enjoy 
the  other  municipal  privileges.  These  restrictions 
became  by  custom  and  by  the  growth  of  the  demo- 
cratic spirit  gradually  less  stringent ;  but  the  provi- 
sion for  the  admission  of  freemen,  which  required 
as  a  condition  either  birth  from  a  freeman,  a  long 
apprenticeship,  or  a  money  payment,  remained  till 
after  1812.^  From  the  beginning,  however,  the 
municipal  suffrage,  contrary  to  the  practice  in 
many  English  cities,  was  not  confined  to  freemen, 
although  in  accordance  with  general  custom  a 
property  qualification  was  required.  This  quali- 
fication was  not  specifically  fixed  for  the  city,  as 
distinguished  from  the  province  as  a  whole,  and 
that  fact  caused  uncertainty  and  dissension.  Fi- 
nally, in  1771,^  by  act  of  the  assembly  the  free- 
hold requirement  for  voting  was  set  at  £,Af)  in 
lands  and  tenants  within  the  ward,  a  citizen  being 
allowed  to  cast  a  ballot  in  each  ward  where  he 
possessed  the  required  property.  The  limit  was 
reduced  in   1787^  to  ;!^20  and  again  in   1800"*  to 

^  Laws  and  Ordinances  of  New  York,  181 2,  Chap.  40.  The  fee 
at  this  time  was  $12.50  for  a  trader,  $2.50  for  a  mechanic. 

2  Laws  of  New  York,  1691-1773,  Van  Schaack's  ed.,  p.  620. 
^  Laws,  1787,  Chap.  42  ;  i  Greenleaf,  p.  376. 
*  Ibid.,  1800,  Chap.  35. 


THE  FLVAjVCES— 166^-1783  I J 

$50;  while  a  law  of  1804^  permitted  in  addition 
that  any  person  might  vote  who  rented  a  tenement 
of  the  yearly  value  of  $25  and  paid  taxes.  The 
constitution  of  1821'-^  made  the  payment  of  taxes 
a  sufficient  qualification  for  any  election  in  the 
state,  and  even  this  requirement  was  removed 
by  the  amendment  of  1826.  Special  elections  on 
financial  matters,  however,  may  still  be  restricted 
to  taxpayers,  and  in  many  villages  and  smaller 
cities  this  custom  prevails ;  but  no  such  limitation 
has  ever  been  made  in  the  few  elections  of  this 
sort  held  in  New  York  city.  Although  the  me- 
tropolis is  thus  not  without  early  experience  of 
the  system  of  property  qualification  for  municipal 
suffrage,  now  so  often  advocated,  the  conditions 
then  were  so  different  from  our  own  that  we  can 
gain  practically  no  light  as  to  its  present  advisa- 
bility. 

§  4.    T/ie  Finances  —  1 66 5- 1 78 3 . 

From  the  beginning  of  British  rule  a  more  lib- 
eral policy  regarding  the  city  finances  was  adopted 
by  the  central  authorities,  which  were  no  longer, 
as  in  the  Dutch  period,  those  of  a  grasping  private 
corporation.  No  longer  was  there  a  constant 
struggle  for  the  wherewithal  to  fill  the  city  chest. 
This  change,  together  with  a  somewhat  greater 
readiness  to  resort  to  direct  taxation,  chiefly  dis- 
tinguished the  early  days  of  New  York  under 
Nicolls  and  Andros  from  the  times  of  Stuyvesant. 

1  Laws,  1804,  Chap.  62.  -  Art.  22. 

c 


1 8  THE  EARLY   CITY— 1632-1830 

The  tavern-keepers'  excise  was  restored  forth- 
with to  the  city  by  Colonel  Nicolls ;  a  few  years 
thereafter  a  municipal  ordinance  abolished  it,  but 
a  little  later  it  was  reestablished,  in  quite  different 
form.^  Moreover,  the  right  to  farm  the  Brooklyn 
ferry,  so  long  coveted,  appears  to  have  been  se- 
cured soon  after  the  English  capture ;  at  any  rate, 
we  find  a  municipal  ordinance  regulating  its  man- 
agement, and  in  1682  an  offer  was  made  to  the 
city  council  of  ;^20  a  year  for  twenty  years  for  the 
privilege  of  maintaining  it.^  The  title  to  this  and 
to  all  other  ferries  from  the  city  thereafter  estab- 
lished was  confirmed  by  Governor  Dongan,  and 
still  more  specifically  by  the  charters  of  1708  and 
1730.  The  ferry  became  soon  the  chief  source  of 
municipal  revenue.  The  Dongan  charter  was  spe- 
cially prized  by  the  city  fathers  and  the  people, 
because  of  its  confirmation  and  extension  of  those 
property  rights  which  contributed  so  much  to  the 
municipal  revenue.  It  gave  the  city  the  owner- 
ship of  the  market  houses,  extended  its  rights  so 
as  to  cover  all  docks  and  wharves,  and  finally  it 
granted  to  the  municipality  all  unappropriated 
lands  on  the  island  to  low-water  mark  —  a  grant 
which,  had  these  lands  been  retained  as  other  mu- 
nicipal properties  then  bestowed  were  retained, 
would  ultimately  have  been  vastly  the  most  im- 
portant  of  all.     The    Montgomerie   charter  gave 

1  Records  of  the  Common  Council,  MS.,  vol.  i,  pp.  24,  31,  153. 

2  Ibid.,  p.  215. 


THE  FINANCES— 1663-1783  1 9 

the  city  all  land  under  water  for  four  hundred  feet 
about  the  island,  a  grant  of  very  great  value  in 
connection  with  the  dock  system. 

The  rights  and  properties  thus  acquired  by  New 
York  over  two  hundred  years  ago  have  been  down 
to  the  present  day  of  immense  financial  impor- 
tance, but,  in  view  of  the  limited  expenditures  of 
the  early  town,  they  possessed  far  greater  rela- 
tive consequence  then.  Indeed,  till  the  middle  of 
the  eighteenth  century,  the  revenues  from  these 
sources  were  usually  sufficient  without  taxation  to 
meet  the  recurrent  outlay  for  city  purposes  proper; 
while  occasionally  when  extraordinary  needs  arose, 
such  as  for  fortifications  or  for  the  new  city  hall 
which  was  completed  in  1704,  some  of  the  cor- 
poration lands  would  be  sold.^ 

Great  as  was  this  reliance  on  indirect  sources  of 
revenue,  the  general  English  policy,  both  in  state 
and  municipal  finance,  did  not  shun  direct  levies 
with  such  thorough  aversion  as  the  Dutch  had 
shown.  The  traditions  of  the  mother  country 
were  more  in  favor  of  property  taxes  than  had 
been  those  of  Holland.  For  a  year  or  two  after 
taking  possession.  Governor  Nicolls  had  required 
special  taxes  for  quartering  his  troops,  but  the 
first  tax  for  municipal  purposes,  based  upon  a 
formal  assessment  of  the  value  of  the  property  of 
the  individual,  was  levied  in   1676.     The  dock  es- 

1  Black,  Municipal  Ownership  of  land  on  J\Ianhatta>i  Island, 
pp.  22-24, 


20  THE  EARLY  CITY— 16^2-1830 

tablished  in  1658  had  just  been  rebuilt  and  much 
enlarged,  and  this  expenditure,  added  to  other  older 
obligations,  left  the  city  with  a  debt  which  was 
reckoned  up  at  the  high  figure  of  £,2Af,^o^}  The 
assessment  list  for  the  '  taxacion  '  laid  for  reduc- 
ing this  debt  is  preserved  complete  ;  most  of  the 
amounts  are  round  sums  of  ^50  or  multiples 
thereof,  showing  that  the  work  of  the  assessors 
was  rather  superficial.  The  entire  assessment  was 
;^99,695  ;  on  this  a  tax  of  one  and  one-half  pence 
in  the  pound  was  levied.  In  the  following  year 
another  tax  for  this  same  purpose  was  raised,  and 
at  three  or  four  other  occasions  during  the  next 
decade  direct  taxation  was  resorted  to,  chiefly  for 
reducing  the  debt.^ 

After  the  establishment  of  the  provincial  as- 
sembly in  1 69 1,  taxes  for  strictly  civil  purposes 
of  the  municipality  were  levied  only  by  special 
acts  of  that  body,  and  up  to  about  1750  such  acts 
were  called  for  but  rarely,  to  meet  some  unusual 
expenditure  or  to  pay  off  accumulated  debts.^  To 
be  sure,  under  an  act  of  1693  *  recurrent  taxes  were 
raised,   after  the    British    custom,   for    supporting 

^  The  figure  is  given  in  the  original  record,  but  seems  scarcely 
possible  from  its  magnitude.  A  tax  of  \\d.  per  pound  would  make 
almost  no  impression  in  reducing  this  debt.  Records  of  the  Common 
Council,  vol.  I,  pp.  41,  61,  82  ff. 

•^  Ibid.,  pp.  93,  152,  265,  287,  334. 

3  The  chief  acts  were  in  1699,  1702,  1717,  1737,  1741-  Van 
Schaack's  Laws,  pp.  35,  50,  105,  199,  209. 

^  Ibid.,  p.  18. 


THE  FINANCES— 166^-1783  21 

the  established  church,  and,  in  connection  there- 
with, for  poor  rehef ;  but  these  were  collected  by  the 
vestrymen  and  did  not  come  to  the  city  treasury. 

It  is  worthy  of  notice  that  from  the  first  these 
various  taxes  were  levied  in  proportion  to  the 
assessed  value  of  property,^  according  to  the  fash- 
ion then  prevalent  in  the  mother  land.  Ameri- 
cans are  so  unaccustomed  to  any  other  form  of 
general  taxation  (aside  from  the  indirect  taxes  of 
the  national  government)  that  this  fact  may  not 
appear  in  its  full  significance ;  but,  in  fact,  many 
other  modes  of  taxation  then  existed  and  still  exist 
in  Europe,  while  even  in  England  municipal  taxes 
are  now  levied  on  an  entirely  different  basis  — 
occupiers  of  buildings  being  assessed  upon  their 
annual  rental.  Had  the  Dutch  retained  control  of 
the  city  longer,  various  forms  of  indirect  taxation, 
or  levies  based  on  other  criteria  than  property, 
might  have  become  permanent  features  of  the  city 
finances;  even  such  unjust  taxes  might  long  have 
continued  as  those  laid  in  Stuyvesant's  time  for 
watching  the  city  and  protecting  it  from  fire,  which 
were  collected  in  uniform  sums  from  each  house- 
hold. 

Up  to  the  close  of  the  war  between  England 
and  France  which  ended  in  1697,  the  chief  city 
expenditure  was  for  the  watch,  this  item  amount- 
ing to  about  ^150  per  year,  but  this  was  there- 

1  For  general  discussion,  see  Schwab,  History  of  A'eiv  York 
Property  Tax. 


22  THE  EARLY  CITY— 1632-1830 

after  reduced  greatly.  The  mayor  and  city  council 
no  longer  received  pay  as  in  the  Dutch  days ;  in- 
deed, they  were  subject  to  a  considerable  fine  for 
failure  to  serve.  Valentine,  in  the  city  Manual 
of  1859,  gives  the  following  summary  for  1710, 
which  shows  well  the  general  nature  of  the 
finances  at  this  period  :  ^  — 

Income 

Rent  of  the  ferry 180 

Rent  of  the  dock 30 

Received  from  68  (tavern)  licenses 51      19     6 

Received  from  15  freedoms,  8  to  merchants  and 

7  to  handicraftsmen 10       2 

Miscellaneous  items 22       6 

294       7     6 

Expenditure 

£,       s.     d. 

Town  clerk,  salary 20 

Marshal,  salary 10 

Treasurer's  commission 20 

Bellmen's  (watchmen's)  salaries 36 

Lanterns  and  hour-glasses  for  watch      ....  3 

Fire  and  candle  for  the  constable's  v^^atch      .     .  3 

Bonfires  on  four  occasions 20 

Repairs  on  city  hall  and  jails 50 

Repairs  at  the  ferry  house 40 

Repairs  on  bridge  and  stairs  at  the  dock  ...  10 

Incidents  on  sundry  occasions 42 

Making  and  repairing  cage,  pillory,  and  stocks  .  10 

Repairing  the  common  sewer 10 

Miscellaneous 3     4 

277     4 

1  Page  505.     The  Hgures  are  apparently  given  only  roughly,  in 
round  numbers. 


THE  FINANCES  — 1663-1783  23 

Several  public  tasks  which  are  now  performed  at 
general  expense,  such  as  lighting  and  cleaning  the 
streets,  were  required  to  be  done  by  the  citizens 
individually  ;  and  for  a  time  after  1 742  they  were 
even  called  upon  to  serve  in  rotation  on  the  watch. 
The  system  of  special  assessments  for  street  im- 
provements, which  had  been  used  in  such  perfect 
form  by  the  Dutch,  apparently  gave  way  during 
the  early  English  period  to  the  other  practice 
inaugurated  in  New  Amsterdam  of  requiring  such 
tasks  to  be  performed  directly  by  the  adjoining 
owners.^  Without  further  proof  of  the  historic 
continuity  of  the  assessment  system  in  the  colony, 
it  would  be  perhaps  hardly  safe  to  assert  that  the 
early  custom  had  special  influence  in  securing  the 
passage  of  the  act  which  in  1691  firmly  established 
the  '  betterment '  principle  in  New  York  finances. 
The  phraseology  of  this  law,  at  any  rate,  was  bor- 
rowed directly  from  England.  The  first  recorded 
application  of  the  principle  in  the  mother  country 
was  in  1662,  for  improving  certain  streets  in  Lon- 
don;  while  from  another  statute  of  1667,  for  the 
improvement  of  that  city  after  the  great  fire,^  the 
New  York  law  ^  was  copied  almost  word  for  word. 
The  latter  act  authorized  the  city  to  pave,  grade, 

^  E.g.  paving  of  street  along  Heere  Gracht,  1676,  Hoffman,  Ap- 
pendix, p.  iv,  and  other  cases  in  Records  of  the  Common  Council. 

2  Seligman,  Essays  in  Taxation,  p.  341.  Dr.  Rosewater,  in 
1891,  first  called  attention  to  the  act  of  1667.  See  his  Special 
Assessments,  p.  16. 

^  Van  Schaack's  Laws,  p.  8. 


24  THE   EARLY   CITY— 16^2-1830 

sewer,  and  otherwise  improve  streets,  and  "  to  im- 
pose any  reasonable  Tax  upon  all  Houses  within 
the  said  City,  in  proportion  to  the  Benefit  they 
shall  receive  thereby,  for  and  towards  the  making, 
cutting,  altering,  enlarging,  amending,  cleansing, 
and  scouring  all  and  singular  the  said  Vaults, 
Drains,  Sewers,  Pavements,  and  Pitching  afore- 
said." 

The  English  betterment  laws  cited  had  been 
temporary  and  special,  and  the  system  there  soon 
fell  into  complete  disuse.  The  New  York  act  was 
the  first  to  establish  this  vastly  important  financial 
method  of  special  assessments  as  a  general  and 
permanent  thing,  and  the  act  of  1787,^  which  lies 
at  the  basis  of  the  more  recent  legislation,  was 
merely  an  extension  of  the  statute  of  1691. 

The  extent  of  the  financial  operations  increased 
.but  slowly  during  the  first  half  of  the  eighteenth 
century,  as  compared  with  the  growth  of  popula- 
tion. The  gross  revenue  in  1 740  was  only  £,747.^ 
Soon  after  this,  on  the  occasion  of  several  extraor- 
dinary expenditures  for  docks  and  other  improve- 
ments, it  became  the  custom  to  incur  temporary 
loans,  and  thenceforth  the  city  had  usually  con- 
siderable floating  debt.'^  To  reduce  this  from  time 
to  time  public  lotteries,  against  which  no  scruples 
then    existed,    were    resorted    to,    the    first    being 

^  Laws,  1787,  Chap.  88;    i  Greenleaf,  p.  441. 

2  This  and  following  figures  from  Valentine,  Manual,  1859. 

3  In  1784  it  was  ;i^i  2,827,  on  which  ^5444  back  interest  was  due. 


TAX  LAIVS  AND  FIXAyCES—  17S4-1830  25 

authorized  in  1756.^  We  find  this  device  still 
employed  in  the  early  years  of  the  present  cen- 
tury. At  this  period,  too,  the  ordinary  expenses 
of  the  corporation  took  a  rapid  upward  movement. 
In  1 741  ^  a  small  annual  tax  for  maintaining  wells 
and  pumps  was  authorized,  and  in  1761  ^  began 
the  yearly  levy  of  a  rather  larger  amount  for  street 
lamps  and  watchmen.  These  taxes  were  added 
to  the  poor  rate  and  collected  by  the  vestrymen. 
Laws  permitting  the  levy  of  other  taxes  for  gen- 
eral or  special  purposes  now  became  more  com- 
mon. In  consequence  of  all  these  additions,  the 
city  income  grew  to  no  less  than  ^10,395  in  1769, 
about  p^3000  of  which  went  to  the  minister  and 
the  poor. 

§  5.    TJie  Tax  Laius  and  Finances — 1 784-1830. 

The  Revolution  made  no  important  changes  in 
the  city  government  or  in  the  finances.  Immedi- 
ately after  the  war,  however,  the  general  move- 
ment toward  greater  personal  freedom  caused  the 
abolition  of  the  rates  which  had  so  long  been 
levied  for  the  support  of  the  Episcopal  ministry,* 
and  therewith  the  collection  of  the  poor  taxes,  and 
other  taxes  which  had  been  embodied  with  them, 
passed  from  the  vestrymen  to  civil  officers.^ 

^  Van  Schaack's  Laws,  p.  363. 

^  Livingston  and  Smith's  Laws,  vol.  i,  pp.  297,  343;    2,  p.  233. 

8  Ibid.,  voL  2,  p.  233. 

*  Laws,  1784,  Chap.  38;    i  Ckeenleaf,  p.  98. 

^  Ibid.,  1787,  Chap.  62;   ibid.,  p.  419. 


26  THE  EARLY   CITY— 16^2-1830 

Down  to  the  present  day  continual  difficulty  has 
been  caused  in  the  financial  administration  of  New 
York  city  by  the  custom  of  collecting  the  taxes  to 
cover  the  expenditure  of  the  calendar  year  in  its 
very  last  quarter,  which  makes  necessary  the  bor- 
rowing of  money  during  a  large  part  of  the  time. 
This  unfortunate  system  existed,  as  regards  state 
taxes,  at  least  as  early  as  1703;^  but  the  rate  for 
the  minister  and  the  poor,  which  had  been  so  long 
practically  the  only  city  tax,  was  collected  in  Janu- 
ary until  1775.  At  that  time,  because  it  was  "  in- 
convenient to  the  Assessors  from  the  Coldness  of 
the  Weather,"  and  also  to  the  inhabitants  since 
"  there  is  but  little  Circulation  of  Money  and  their 
Family  Expences  higher  than  at  any  other  Season 
of  the  Year,"  this  local  tax  was  made  payable  on 
August  i.^  It  was  natural  that  mere  convenience 
should  lead  ultimately,  in  1788,^  to  the  collection 
of  city  and  state  taxes  at  the  same  time,  in  the 
latter  part  of  the  year. 

The  same  act  which  made  this  change  laid  down 
the  first  definite  regulations  as  to  the  duties  of  the 
chamberlain.  He  was  directed  to  keep  "just,  true, 
and  distinct  Accounts,"  and  annually,  between 
September  29  and  December  14,  to  exhibit  them, 
with  the  vouchers,  to  the   mayor  and  council,  as 

1  Van  Schaack's  Laws,  p.  54. 

2  Laws,  1775,  Chap.  57. 

3  Laws,  1788,  Chap.  67;  2  Greenleaf,  p.  181.  The  change  was, 
perhaps,  made  in  practice  earlier. 


TAX  LAWS  AND   FINANCES—  1784-1830  2 J 

well  as  to  publish  a  summary,  on  the  first  Monday 
in  November,  in  one  or  more  newspapers. 

The  state  legislature  was  quite  as  jealous  of 
taxation  by  the  city  as  had  been  the  provincial 
assembly.  The  natural  growth  of  expenditure  for 
other  purposes,  as  well  as  the  change  which  placed 
the  burden  of  poor  relief  on  the  municipality  itself, 
now  rendered  it  necessary  to  raise  regular  annual 
property  taxes.  The  excuse  for  state  control, 
which  had  perhaps  existed  when  direct  taxes  were 
needed  only  on  extraordinary  occasions,  no  longer 
existed,  but  the  legislature  nevertheless  insisted 
that  annual  tax  acts  be  secured;  and  for  no  less 
than  ninety  years,  beginning  in  1784,  the  city  re- 
mained subject  to  this  central  control.  Similar 
annual  tax  laws  were  for  a  time  passed  for  other 
cities  in  the  state,  but  they  soon  gave  way  to  gen- 
eral authorizations.  The  greater  magnitude  of  the 
metropolitan  finances  doubtless  led  to  the  long 
continuance  of  the  practice  in  this  instance.  The 
control  thus  exercised  was,  to  be  sure,  for  a  long 
time  almost  purely  formal,  and  was  not  the  source 
of  abuse  such  as  became  so  flagrant  in  later  days. 
Little  if  any  change  was  ever  made  in  the  tax  laws 
sent  up  for  approval,  nor  did  they  prescribe  the 
details  of  the  city  budget,  as  came  to  be  the  case 
about  the  middle  of  the  present  century.  They 
fixed  usually  only  two  gross  sums,  one  assessed  on 
the  whole  county  for  the  poor,  roads,  and  miscella- 
neous expenses ;  the  other,  assessed  on  the  more 


28  THE  EARLY   CITY—  1652-1830 

limited  district  especially  benefited,  for  watching 
and  lighting.^  Occasionally  additional  sums  for 
some  specific  improvement  were  inserted. 

In  conformity,  doubtless,  with  the  theory  at  the 
basis  of  this  system,  that  taxation  is  a  peculiarly 
sovereign  prerogative,  the  power  to  levy  city  taxes 
was  conferred  upon  the  supervisors  of  the  county 
of  New  York,  as  being  more  directly  an  organ  of 
the  state  government,  instead  of  upon  the  council 
itself.  Down  to  1857  this  awkward  distinction  was 
a  merely  formal  one,  as  the  mayor,  recorder,  and 
aldermen  served  also  as  supervisors.^  The  assist- 
ant aldermen  did  not  share  this  empty  honor,  but 
that  fact  was  of  no  practical  importance,  since  the 
levying  of  taxes  in  the  city  is  little  more  than  a 
mechanical  function,  while  in  voting  the  expendi- 
ture on  which  taxes  were  based,  the  assistants  had 
equal  power. 

In  the  details  of  the  financial  system  little  prog- 
ress was  made  up  to  1830.  By  far  the  most  im- 
portant step  was  the  creation  of  the  office  of 
comptroller  in  1801.  This  was  an  act  not  of  the 
legislature  but  of  the  common  council,  which, 
indeed,  dictated  the  entire  constitution  of  the  execu- 
tive departments.  The  comptroller,  who  was  des- 
tined later  to  possess  most  powerful  influence  in 
municipal  affairs,  had  at  first  but  little  authority, 

^  These  two  main  divisions  persisted  till  1837,  when  the  lighting 
and  watching  districts  were  separated.     Laws,  1837,  Chap.  80. 
-  Laws,  1787,  Chap.  62;    i  Greenleaf,  p.  419. 


TAX  LAWS  AND   FINANCES—  1784-1830  29 

the  council  itself  retaining  control  even  of  financial 
details.  It  was  his  duty,  declared  the  ordinance,^ 
"to  examine  and  to  liquidate  all  claims,  to  audit 
all  accounts  against  this  corporation  in  all  cases 
whatever,  and  to  report  the  same  to  the  Board  at 
each  subsequent  meeting,  for  its  order  in  the 
premises ;  and  also  to  countersign  all  warrants  to 
be  drawn  on  the  Chamberlain  or  Treasurer  of  the 
city,  for  the  payment  of  all  monies  directed  by  the 
Board ;  and  in  case  where  the  Comptroller  can  not 
adjust  the  same  without  the  interference  of  the 
Board,  he  shall  examine  such  claim,  and  report  the 
facts  concerning  it,  with  his  opinion  thereon.  .  .  ." 
He  was  to  exhibit  a  balance  sheet  every  six  months 
to  the  council. 

There  was  at  this  period  no  system  of  appropria- 
tions in  advance  of  expenditure,  either  annual  or 
special.  The  council  often  ordered  public  works, 
and  counted  the  cost  only  after  it  had  been  incurred. 
Some  estimate,  however,  had  to  be  made  in  order 
to  apply  to  the  legislature  for  the  proper  tax  law. 
So  long,  moreover,  as  the  council  itself  directed 
the  details  of  the  administration  and  even  audited 
the  smallest  bills,  there  was  somewhat  less  need  of 
limiting  expenditures  by  previous  appropriations. 
Nevertheless,  the  absence  of  such  a  system  tended 
toward  careless  management  and  extravagance, 
and    often    resulted    in    considerable    deficiencies. 

'  As  recnacted  in  18 12,  Laws  and  Ordinances  of  New  York, 
1 81 2,  Chap.  9. 


30  THE  EARLY  CITY— 1632-1830 

Especially  after  the  War  of  18 12,  when  times  were 
unusually  hard,  deficiencies  kept  accumulating  till 
finally,  in  1820,  it  became  necessary  to  fund  about 
;^200,ooo  of  floating  debt.^ 

The  expenditures  during  these  early  years  appear 
very  low  from  the  present-day  standpoint,  and  even 
after  certain  of  the  miscellaneous  revenues  had 
been  set  aside  for  the  sinking  fund  (18 13),  these 
continued  to  cover  a  considerable  part  of  the  annual 
outlay.  The  first  tax  law  (1784)  had  authorized  the 
collection  of  ;^6ooo  ($30,000)  for  the  poor,  roads, 
etc.,  and  ;^4000  ($20,000)  for  the  watch  and  light- 
ing.^ The  following  figures  show  the  relative  impor- 
tance of  the  various  objects  of  outlay  in  1798  :^  — 

Schools $  2,000 

Poorhouse  and  bridewell  .     .     .  40,000 

Contingencies 30,000 

Watch 23,000 

Lamps 1 3^000 

$  108,000 

The  receipts  from  the  ordinary  revenues  —  fer- 
ries, rents,  etc. — were  in  that  year  about  $20,000. 
This  expenditure  represents  less  than  two  dollars 
for  each  inhabitant  of  the  city  at  that  day,^  a 
marked  contrast  with  the  present  time,  when  the 
annual  outlay,  excluding  state  taxes,  has  reached 

1  Laws,  1820,  Chap.  loi ;   Valentine,  p.  518. 

2  Laws,  1784,  Chap.  43. 

^  These  and  other  figures  herein  are  from  Valentine,  pp.  514  ff. 
*  Population  in  1800  about  60,000. 


TAX  LAWS  AND  FINANCES—  17S4-1830  3  I 

over  twenty  dollars  per  capita.  The  small  expendi- 
ture indicates,  however,  not  necessarily  economy, 
but  rather  the  limited  character  of  the  services 
which  the  city  did  for  its  people.  Nothing  was 
spent  for  fire  protection,  water  supply  (save  a 
small  sum  for  wells  and  pumps),  or  street  clean- 
ing, and  the  city  was  '  watched '  only  at  night. 
In  comparison  with  population  and  wealth,  city 
expenditure  increased  less  rapidly  from  1800  to 
1830  than  at  any  succeeding  period.  Although 
the  annual  outlay  multiplied  about  fivefold,  the 
regular  budget  reaching  $676,618  ^  in  1830,  the 
population  had  meantime  more  than  tripled  while 
the  assessed  valuation  had  grown  sixfold,^  the 
tax  rate  being  thus  reduced  from  50  cents  on  $100 
to  42  cents.  By  1830,  however,  some  new  munici- 
pal activities  had  been  introduced ;  considerable 
sums  were  now  spent  for  street  cleaning,  for  the 
volunteer  fire  department,  for  public  reservoirs  and 
pipes  (largely  for  fire  purposes),  and  for  courts,^ 
while  the  cost  of  schools  had  risen  to  over  $25,000. 
The  support  of  the  almshouse  and  the  asylums 
and  correctional  institutions  connected  with  it, 
and  that  of  the  watch,  continued  to  be  the  most 
important  city  expenses.  The  revenues  from 
sources  outside  taxation  had  increased  even  more 
rapidly  than  the  taxes. 

1  Figures  all  from  Comptroller's  Report,  1830. 

2  From  ^20,703,000  in  1801  to  $125,288,518  in  1830. 

3  ;J25,976,  ;g23,462,  $32,275,  and  $38,417,  respectively. 


32  THE   EARLY   CITY— 1632-1830 

During  this  period  special  assessments  assumed 
great  importance.  In  1830  the  expenditure  to  be 
recovered  by  this  method  reached  $202,301,  equal 
to  nearly  one-half  of  the  amount  raised  by  tax 
in  that  year.^  Besides  all  sorts  of  street  improve- 
ments, the  law  authorized  the  building  of  wharves 
and  piers  along  the  water  front  by  assessment  on 
the  adjoining  property^  —  a  method  long  since 
abandoned.  By  an  act  of  1807  the  system  was 
extended  to  payment  for  the  cost  of  land  taken 
for  opening  new  streets,  where  it  has  ever  since 
been  largely  employed.^  This  change  was  intro- 
duced in  connection  with  a  comprehensive  plan 
for  laying  out  streets  by  state  commissioners. 
The  city  was  authorized  at  discretion  to  collect 
the  entire  cost  of  street  openings  from  property 
benefited,  but  later  acts  have  often  required  a 
part  to  be  paid  from  the  city  treasury. 

§  6.    The  City  Debt.'' 

The  first  decade  of  this  century  witnessed  great 
activity  in   the   making   of    permanent   municipal 

1  Comp.  Rep.,  1830,  p.  30. 

2  Laws,  1787,  Chap.  88,  i  Greenleaf,  p.  441;  Laws,  1801,  Chap. 
129. 

^  Ibid.,  1807,  Chap.  115.  The  distinction  between  assessments 
for  opening  streets  and  those  for  paving  and  improving  them  must 
always  be  borne  in  mind,  as  the  provisions  relating  to  the  two  often 
differ  widely. 

*  Many  details  in  this  section  based  on  Black,  Municipal  Owner- 
ship of  Land  on  Manhattan  Island,  pp.  41-52,  and  Valentine's 
article,  pp.  513-519. 


THE    CITY  DEBT  33 

improvements.  The  present  city  hall  was  built, 
an  almshouse  was  erected,  and  large  outlay  was 
caused  by  filling  in  the  lake  or  swamp  called  the 
Kolck,  north  of  what  is  now  Central  Park.  Not  a 
little  of  this  extraordinary  expenditure  was  de- 
frayed by  the  sale  of  lots  belonging  to  the  city, 
whose  value  had  risen  greatly  with  the  rapid  pros- 
perity of  the  time ;  but  the  larger  part  of  it  went 
to  swell  the  floating  debt  which  had  so  long  hung 
over  the  city  treasury.  The  short-time  loans  were 
continually  falling  due,  to  the  considerable  embar- 
rassment of  the  city  fathers,  who  at  last  resolved 
to  petition  the  legislature  for  permission  to  issue 
$900,000  of  funding  bonds.  The  petition,  which 
set  forth  the  extraordinary  outlays  which  had  been 
made,  and  which  would  still  be  required  for  open- 
ing streets,  was  granted  in  1812,^  and  the  history 
of  the  funded  debt  of  New  York  city  was  begun. 
Seven  hundred  thousand  dollars  of  the  stock  was 
immediately  issued,  the  remainder  a  few  years  later. 
The  term  of  the  bonds  was  fourteen  years,  and  the 
rate  of  interest  6  per  cent. 

The  establishment  of  the  sinking  fund,  which 
has  had  such  far-reaching  consequences,  dates 
from  18 1 3.  It  is  noteworthy  that  this  step  was 
taken  by  the  local  authorities  without  legislative 
action.  The  law  of  18 12  had  pledged  "all  and 
singular  the  revenues  "  of  the  city  to  the  payment 
of  the  debt,  and  had  promised  that  in  default  a 

'  Laws,  1812,  Chap.  99. 
D 


34  THE  EARLY  CITY  — 16^2-1830 

special  tax  would  be  levied  upon  the  citizens,  but 
no  definite  provision  was  made  for  setting  aside 
funds.  It  was  the  city  comptroller,  Thomas  R. 
Mercein,  who  first  proposed  the  plan  of  devoting 
certain  kinds  of  revenue  to  a  sinking  fund.^  He 
estimated  that  with  accumulated  interest  these 
would  amount  by  1826  to  $400,000,  and  suggested 
that  the  remainder  of  the  debt  could  then  be 
either  postponed  or  met  by  the  sale  of  lands.  On 
August  9,  18 1 3,  the  council  passed  an  ordinance 
following  closely  these  suggestions.^ 

This  measure,  which  made  no  provision  for 
interest,  appropriated  to  the  redemption  of  the  city 
debt  the  income  from:  (i)  commutation  of  water 
lot  rents  on  grants  prior  to  1804  and  quit-rents 
not  commuted  on  such  grants,  (2)  pawnbrokers' 
and  second-hand  dealers'  licenses,  (3)  coach  and 
(4)  street  vault  licenses,  (5)  market  rents  and  fees, 
and  (6)  25  per  cent  —  a  few  years  later  extended 
to  all  —  of  sales  of  city  real  estate.  The  control 
of  these  revenues  and  of  the  investments  of  the 
sinking  fund  was  placed  in  the  hands  of  an  ex 
officio  commission,  consisting  of  the  mayor,  re- 
corder, comptroller,  chamberlain,  and  chairman  of 
the  finance  committee  of  the  board  of  aldermen 
— -a  time-honored  body  whose  membership  is  un- 

1  Report  of  the  Comptroller  on  the  Establishment  of  a  Sinking 
Fund,  printed  separately. 

-  Manuscript  ordinances,  Mayoralty  of  DeWitt  Clinton,  p.  105, 
copied  closely  in  printed  Ordinances,  1821,  Chap.  32. 


THE    CITY  DEBT  35 

changed  to  this  day.  They  were  directed  to  pur- 
chase preferably  city  stock,  but  were  not  to  pay 
more  than  par,  and,  if  need  be,  might  buy  tempo- 
rarily United  States  bonds  or  stock  of  New  York 
banks.  As  a  matter  of  fact,  resort  to  this  alterna- 
tive proved  necessary  only  to  a  very  limited  extent, 
and  that  for  but  a  few  years  after  the  creation  of 
the  fund.^ 

The  policy  adopted  by  this  ordinance  was  crude 
as  compared  with  the  stringent  regulations,  now 
common  in  many  states,  for  the  redemption  of 
municipal  debts  by  setting  aside  annually  sums 
precisely  sufficient  to  pay  them  at  maturity ;  and 
by  too  long  continuance  it  has  needlessly  compli- 
cated the  city  finances.  Nevertheless,  the  measure 
was  a  fairly  advanced  one  for  that  day.  It  was 
not  many  years  before  1812  that  the  United  States 
government  had  pursued  the  policy  of  appropri- 
ating specific  revenues  for  debt  reduction ;  while 
in  England  the  fallacious  idea  that  debt  could  be 
extinguished  practically  without  effort  by  accumu- 
lating compound  interest  was  still  in  vogue,  and 
had  led  even  to  the  absurdity  of  borrowing  money 
to  keep  up  the  regular  payments  to  the  sinking 
fund.  The  entire  absence  of  this  famous  '  sinking 
fund  fallacy '  in  the  discussion  by  the  city  comp- 
troller is  noteworthy.  The  accumulation  of  inter- 
est on  securities  purchased  does  not  necessarily 
imply  the  holding  of  that  theory.     Almost  the  only 

1  Comp.  Rep.,  1858,  pp.  46-49. 


36  THE  EARLY   CITY—i6j2-i8jo 

argument  given  by  Mr.  Mercein  for  the  proposed 
sinking  fund,  aside  from  "  a  well-grounded  belief 
that  its  utility  must  be  obvious  to  all,"  was  that  it 
would  aid  in  maintaining  the  high  credit  of  the  city, 
which  was  important  "  because  emergencies  may 
happen,  which  will  require  new  loans."  So,  too, 
the  preamble  of  the  ordinance  simply  refers  to  the 
advantage  that  "  the  said  stock  will  be  prevented 
from  depreciating,  and  the  redemption  of  the  same 
will  be  regularly  progressing." 

The  revenues  devoted  to  the  fund  constituted  at 
first  considerably  less  than  half  of  the  income  of 
the  corporation  from  other  sources  than  taxation. 
Rents  from  docks,  ferries,  and  real  estate,  and 
other  miscellaneous  revenues,  were  still  paid  into 
the  general  treasury.  The  receipts  of  the  sinking 
fund  in  1816  represent  about  the  average  between 
18 1 3  and  1820,  if  we  disregard  special  sales  of  real 
estate  in  18 18  and  18 19.^ 

Sinking  Fund  Receipts,  18 16 

Commutation  quit-rent $  1,667 

Sinking  fund  —  water  lot  rent    .     .     .  1,969 

Market  fees 8.038 

Street  vaults 1,638 

Pawnbroker's  licenses 650 

Hack  licenses 465 

Commutation  wheat  quit-rent     .     .     .  i»999 

$16,427 

Interest  on  accumulations      ....  2,824 

Total $  I9>25i 

1  Comp.  Rep.,  1858,  p.  46. 


CHARACTER    OF   THE    GOVERNMENT  37 

Had  it  not  been  for  a  very  rapid  increase  in 
market  rents,  due  to  the  erection  of  Fulton  Market 
in  1820-21,  the  comptroller's  estimate  of  the  accu- 
mulations of  the  fund  in  1826  would  have  proved 
too  low.  As  it  was,  however,  the  fund  then 
amounted  to  nearly  half  a  million.^  To  meet  the 
remainder  of  the  debt  temporary  loans  were  made, 
and  finally,  in  1829,  $300,000  of  20-year  refunding 
bonds  were  issued.^ 

In  1820  another  loan  of  $400,000  was  made, 
half  of  which  was  for  funding  floating  debt,  and 
the  rest  for  constructing  Fulton  Market.  A  por- 
tion of  the  amount  was  redeemable  at  an  early 
date;  in  1830  the  remainder  outstanding  was 
$270,300.  The  total  funded  debt  in  that  year  was 
accordingly  $570,300,  while  the  assets  of  the  sink- 
ing fund  were  $227,744.^ 

§  7.    Goieral  Character  of  the  Government. 

The  question,  how  well  the  city  was  governed 
in  these  early  days,  or  in  what  respects,  if  any,  the 
system  was  superior  to  the  present  one,  is  very 
difficult  to  answer.  The  common  council  centred 
in  itself  practically  all  power,  the  government 
being  indeed  very  similar  to  that  which  is  so  suc- 
cessful in  England  to-day.  They  organized  all  the 
executive  departments  and  chose  the  officers  to  fill 
them,  even  the  appointment  of  the  mayor,  who  had 

^  Comp.  Rep.,  1858,  pp.  46-48,  by  coiii])utation. 

'■^  Under  authority  of  a  law  of  1S26,  (."hap.  93;    Black,  p.  57. 

^  Comp.  Rep.,  1830,  p.  4. 


2151.48 


38  THE  EARLY  CITY— 1652-1830 

long  continued  to  be  named  by  the  governor,  being 
given  over  to  the  council  by  the  constitution  of 
1 82 1.  Though  the  old  provision  that  ordinances 
should  remain  in  force  only  a  limited  time  unless 
approved  by  the  legislature  still  persisted,^  this  was 
not  made  a  means  of  active  central  interference. 
This  method  of  council  government  remained  al- 
most unmodified  up  to  1849,  and  in  the  later 
period  at  least  did  not  escape  considerable  abuses ; 
but  it  is  probably  true  that  before  1830  the  system 
worked  considerably  better,  although  the  halo  of 
distance  has  materially  brightened  the  reputation 
of  these  'good  old  days.'  Certain  it  is  that  the 
citizens  of  that  time  itself  were  not  entirely  satis- 
fied, for  in  1829  a  city  convention,  whose  action 
was  endorsed  by  popular  vote,  urged  strenuously 
the  removal  of  all  executive  functions  from  the 
council.^  However,  the  charges  brought  by  the 
convention  were  hardly  severe  and  specific  ones, 
and  theoretical  considerations  had  special  weight 
in  its  discussions.  It  is  beyond  question  that  dur- 
ing the  first  decade  of  this  century  a  much  higher 
class  of  citizens  composed  the  city  government 
than  is  now  the  case.  One  would  hardly  expect 
to-day  to  see  a  man,  who  had  already  been  gov- 
ernor, resign  from  the  United  States  Senate  to  be- 
come mayor  of  New  York,  as  did  DeWitt  Clinton. 
One  erroneous  impression  exists  regarding  the 

1  Extended  from  one  to  three  years  in  1 806,  Laws,  Chap.  126, 

-  See  §  8. 


CHARACTER    OF   THE    GOVERNMENT  39 

government  of  this  period.  It  was  not  free  from 
party  politics.  Just  what  pecuHarity  of  our  Ameri- 
can character  or  what  unique  external  conditions 
caused  the  development  here  of  an  evil  which 
European  municipalities  have  to  considerable  de- 
gree escaped,  it  would  be  hard  to  say.  The  first 
conflicts  of  national  politics  were  mirrored  in  New 
York  city,  and  though  in  the  federal  government 
the  spoils  system  did  not  at  first  find  undisputed 
sway,  it  was  very  soon  almost  universal  in  the  city. 
In  the  harmonious  Federalist  days  Richard  Varick 
had  held  the  mayoralty  for  twelve  years.^  But 
from  the  very  outset  of  party  strifes  at  the  opening 
of  this  century,  the  appointment  of  the  mayor  was 
considered  at  Albany  a  legitimate  spoil ;  and  as 
often  as  the  political  complexion  of  the  council  of 
appointment  changed.  New  York  had  a  new  chief 
executive.  From  1801  to  1823  the  mayor  was 
changed  nine  times.  In  the  city  itself,  despite  the 
fact  that  municipal  elections  were  held  in  April,  the 
parties  fought  bitterly  over  the  choice  of  aldermen. 
In  1 80 1  a  number  of  young  men  in  two  wards,  shut 
out  by  the  freehold  requirement,  bought  jointly  a 
house  and  lot,  "upon  the  principle  of  a  tontine," 
and  were  allowed  to  vote,  though  the  election  was 
afterward  contested  on  this  ground.  The  Demo- 
crats first    secured    a    majority  of   the  council   in 

^  Most  of  what  follows  is  based  on  an  article  by  D.  T.  Valentine, 
"  Political  History  of  New  York  City,"  in  the  Manual  of  1854,  which 
gives  official  figures  and  documents. 


40  THE   EARLY   CITY— 1632-1830 

1804,  and  the  minutes  of  a  caucus  which  they  held 
record,  one  after  another,  motions  to  remove  all 
but  one  of  the  city  officers,  each  vote  being  'unani- 
mous.' The  influence  of  the  city's  precedent  was 
considered  specially  important  in  national  elections. 
Party  feeling  was  unusually  strong  during  and 
after  the  War  of  18 12.  One  of  the  many  flaming 
campaign  circulars  used  in  the  purely  local  elec- 
tions has  these  words  :  — 

"  Republicans  !  Do  you  wish  again  to  see  this 
city  in  the  hands  of  tories — to  be  governed  by 
traitors  and  cowards  }  Azvake  !  .  .  .  To  the  polls, 
then,  every  man  of  you  —  devote  the  whole  of  this 
last  day  to  the  preservation  of  your  rights  —  to 
the  salvation  of  your  country  !  " 

Surely  party  politics  were  not  absent  here.  The 
frequent  almost  total  change  of  membership  in  the 
council  shows  how  far  short  the  city  fell  of  the 
standard  now  held  up  to  us  by  English  munici- 
palities where  councillors  and  aldermen  frequently 
retain  their  positions  for  half  a  life-time. 


CHAPTER   III 

COUNCIL    GOVERNMENT    UNDER    THE    CHARTER 
OF    1830 

§  8.    TJic  Charter  of  1830. 

The  so-called  charter  of  1830  was  a  compara- 
tively brief  act,  in  the  nature  of  constitutional 
legislation,  the  details  of  government  being  left 
to  the  council  to  work  out.  The  purpose  of  the 
zealous  reformers  who  framed  it,  however,  was  to 
institute  far  more  radical  changes  than  were  in  fact 
accomplished.  They  proposed  nothing  short  of 
an  entire  remodelling  of  the  city  government  after 
the  pattern  of  the  federal  and  state  constitutions, 
but  the  spirit  of  their  too  general  enactments  was 
little  carried  out  in  practice. 

The  agitation  for  some  such  changes  had  been 
long  brewing  among  the  people.  One  of  the  chief 
amendments  which  was  sought — the  separation  of 
the  aldermen  and  assistant  aldermen  into  two  inde- 
pendent boards — had  been  twice,  in  1824  and  1828, 
submitted  to  popular  vote,^  but  had  been  rejected, 
perhaps  because  the  proposed  change  was  coupled 
with  an  extension  of  the  term  of  the  upper  board. 

'  Laws,  1824,  Chap.  155;    1828,  ("hap.  249. 
41 


42  COUNCIL    GOVERNMENT 

But  the  movement  did  not  subside.  At  last,  in 
1828,  in  accordance  with  the  traditions  of  home 
rule  then  prevalent,  a  city  convention  was  held, 
composed  of  five  delegates  from  each  ward.^  The 
charter  it  recommended  was  ratified  by  the  people, 
while  on  the  question  as  to  the  term  of  the  council, 
submitted  to  separate  vote,  the  decision  was  for 
a  single  year's  term  for  both  aldermen  and  assist- 
ants. The  charter  as  adopted  was  passed  by  the 
state  legislature  unmodified.^ 

The  principles  expressed  by  the  convention  of 
1829  are  of  great  interest.  Most  stress  was  per- 
haps laid  upon  the  separation  of  the  council  into 
two  boards,  "  for  the  same  reason  which  has  dictated 
a  similar  division  of  power  into  two  branches,  each 
checking  and  controlling  the  other,  in  our  general 
government."  ^  Most  of  the  delegates  favored 
also  a  longer  term  for  the  upper  house,  aiming  to 
make  it  approximate  in  nature  to  the  United 
States  Senate.  A  provision  excluding  the  mayor 
henceforth  from  the  council  and  giving  him  the 
veto  power  was  designed  to  furnish  an  additional 
check.  The  convention  proposed  also  that  the 
mayor  should  thereafter  be  elected  by  the  people 
instead  of  by  the  council,  but  as  this  required  a  con- 

1  Journal  of  the  Convention,  printed  in  Kent's  edition  of  the 
Charter  of  Neiv  York,  1836. 

2  Laws,  1830,  Chap.  122. 

3  This  and  following;  quotations  from  "  Address  of  the  Conven- 
tion," A^eiv  York  Commercial  Advertiser,  October  24,  1829. 


THE    CHARTER    OF  1830  43 

stitutional  amendment,  the  change  was  not  effected 
till  1834.^  These  changes  were  mtended  also  to 
aid  in  the  second  great  reform  that  was  advocated, 
—  the  division  of  executive  from  legislative  power. 
With  a  view  to  completing  this  separation,  it  was 
enacted  that 

"  The  executive  business  of  the  Corporation  of 
New  York  shall  hereafter  be  performed  by  distinct 
departments,  which  it  shall  be  the  duty  of  the 
common  council  to  organize  and  appoint  for  that 
purpose." 

As  we  shall  see,  the  council  neglected  to  carry 
out  this  too  indefinite  command,  but  the  intent  of 
the  convention  is  clear  from  the  address  to  the 
people  with  which  the  charter  was  submitted :  — 

"  At  present  most  of  the  revenues  of  the  city  are 
expended,  and  its  most  important  executive  busi- 
ness in  relation  to  public  works,  buildings,  repairs, 
&c.,  are  performed,  by  committees  of  the  same 
board  which  orders  the  work  or  the  expenditure. 
By  separating  these  duties,  by  expressly  confining 
the  Corporation  to  the  legislation  of  the  city,  the 
appropriation  of  monies,  the  appointment  of  officers 
and  the  supervision  of  their  accounts,  and  by  en- 
trusting all  duties  purely  executive  to  officers 
arranged  in  proper  departments  ...  it  seems  cer- 
tain that  greater  responsibility  will  be  ensured." 

The  executive  power  of  the  mayor  was  intended 
to  be  somewhat  increased  by  the  charter,  but  the 

1  Laws,  1834,  Chap.  133. 


44  COUNCIL    GOVERNMENT 

appointment  of  officers  still  remained  with  the 
council. 

It  was,  further,  the  design  of  the  convention 
that  the  separate  executive  departments  should  be 
thoroughly  under  the  oversight  of  the  municipal 
legislature  and  responsible  to  it.  The  council  was 
to  provide  for  official  accountability,  while  a  de- 
tailed statement  of  the  city  receipts  and  expendi- 
tures was  to  be  published  annually.  Most  important 
of  all  was  the  provision  which  now  first  introduced 
a  regular  appropriation  system  :  — 

"Annual  and  occasional  appropriations  shall  be 
made  by  proper  ordinances  of  the  common  council, 
for  every  branch  and  object  of  city  expenditure ; 
nor  shall  any  money  be  drawn  from  the  city 
treasury,  except  the  same  shall  have  previously 
been  appropriated  to  the  purposes  for  which  it  is 
drawn."  The  spirit  of  this  section  is  evident  from 
the  declaration  of  the  convention  :  — 

"  It  will  bring  the  whole  disbursements  of  the 
city  annually  before  the  Corporation  and  their  con- 
stituents, and  by  shewing  the  several  heads  of 
expense  distinctly,  will  indicate  the  proper  place 
and  mode  of  reform  or  retrenchment.  .  .  .  Besides, 
every  man's  experience  will  teach  him  that  when  a 
limited  sum  of  money,  esteemed  adequate  to  any 
given  object,  is  set  apart  for  it,  the  same  is  much 
more  likely  to  be  used  discreetly,  and  made  to  go 
as  far  as  possible  in  effecting  its  end,  than  if  it  were 
allowed,  without   limit,  under  a  general  order  to 


THE    CHARTER    OF  1830  45 

complete  the  work,  or  make  the  necessary  pur- 
chase, whatever  they  might  cost.  A  contrary 
practice  under  our  present  system,  of  appointing 
committees  *  with  power '  to  carry  into  effect 
resolutions  of  the  Board,  without  any  previous 
specific  appropriation,  is  believed  to  be  a  source  of 
no  small  part  of  our  city  debt  and  taxes." 

From  all  this  it  is  perfectly  clear  that  the  ideas 
of  the  worthy  delegates  to  the  convention  of  1829 
were  all  moulded  on  the  conventional  example  of 
the  federal  and  state  governments.  The  two 
mutually  restraining  houses,  the  veto  by  the 
mayor,  the  separation  of  executive  and  legislative 
functions,  the  appropriation  system  —  all  were 
copied  closely.  The  question  whether  the  differ- 
ent character  of  municipal  affairs  might  not  justify 
considerable  differences  in  the  form  of  govern- 
ment, was  not  raised.  It  was  apparently  not  even 
because  specially  grievous  fault  was  found  in  the 
actual  working  of  the  existing  system,  —  for  the 
charges  against  it,  after  all,  are  neither  bitter  nor 
specific,  — but  far  more  on  theoretical  grounds,  that 
these  changes  were  urged.  ]3e  this  as  it  may,  it  is 
certain  that  the  objects  sought  by  the  charter  of 
1830  were  almost  entirely  frustrated  in  practice. 
The  utterances  of  the  convention  are  chiefly  inter- 
esting as  showing  how  early  and  how  strong  was 
the  movement  towards  following  national  prece- 
dent, a  movement  which  continued  till  nineteen 
years  later  a  law  more  effective  to  accomplisli  this 
end  was  secured. 


46  COUNCIL    GOVERNMENT 

§  9.     TJic  Budget. 

In  accordance  with  the  requirement  of  the  char- 
ter, the  common  council  early  passed  an  ordinance 
providing  for  a  system  of  appropriations. ^  Although 
the  council  took  office  in  May,  appropriations  were 
to  be  made  for  the  calendar  year.  The  members 
therefore  would  acquire  some  experience  before 
being  called  upon  to  vote  the  budget.  The  vari- 
ous executive  officers  were  required  to  furnish  the 
comptroller  "  a  detailed  statement,  as  near  as  may 
be,  of  the  sums  which  will  be  required  for  each 
distinct  object  of  expenditure."  On  the  basis  of 
these,  the  comptroller  was  to  present  to  both 
boards,  in  December,  a  general  estimate  for  the 
year,  together  with  an  estimate  of  the  probable 
miscellaneous  revenues  and  of  the  amount  that 
must  be  raised  by  taxation,  in  order  that  applica- 
tion might  be  made  to  the  legislature  for  the 
annual  law,  which  should  fix  the  limit  of  the  levy. 

Considerable  diversity  appears  in  the  methods 
of  action  on  the  budget  in  different  years.  The 
estimates  were  always  at  once  referred  to  the 
joint  finance  committee,  which  reported  to  the 
council  early  in  January,  when  the  tax  law  was 
at  once  framed  and  forwarded  to  Albany.  In 
drawing  up  this  bill,  the  council  of  course  ought 
to  have  felt  that  it  was  limiting  practically  even  the 
details  of  the  appropriation,  although  these  were 

1  See  Laws  and  Ordinances  of  New  York  city,  revised  1834, 
p.  109. 


THE  BUDGET  47 

sometimes  not  fixed  by  ordinance  till  later,  tempo- 
rary appropriations  being  quite  often  made  pend- 
ing further  discussion,  as  is  now  the  custom  of  the 
British  Parliament.  In  at  least  two  cases,  indeed, 
1840^  and  1843,^  the  council  appears  to  have  con- 
sidered that  the  voting  of  the  appropriations  was  a 
mere  formality  after  the  decision  as  to  the  tax  levy  ; 
for  the  original  appropriations  covered  barely  half 
of  the  amount  of  the  estimates,  and  it  was  left  for 
the  new  council,  which  took  office  May  i,  to  vote 
supplies  for  the  rest  of  the  year.  The  purpose  of 
this  action  may  have  been  to  put  the  responsibility 
on  the  incoming  board. 

The  fact  that  such  procedure  as  this  was  con- 
sidered a  legitimate  fulfilment  of  the  requirement 
of  annual  appropriations  shows  how  loose  was  the 
interpretation  of  the  charter.  Such  action,  how- 
ever, would  not  have  been  specially  harmful  had 
the  estimates  in  accordance  with  which  the  taxes 
were  raised  been  in  fact  always  treated  as  limita- 
tions on  expenditure.  But  there  was  an  unfortu- 
nate freedom  also  in  construing  the  permission  to 
pass  '  occasional  appropriations,'  the  purpose  of 
which  was  merely  to  allow  for  extraordinary  con- 
tingencies. Gradually  grew  up  a  most  vicious 
system  of  additional    appropriations,  very  similar 

1  Proceedings  of  the  Council  approved  by  the  Mayor,  vol.  7 
(1839-40),  p.  Ill;    vol.  8,  pp.  6,  23,  44,  65,  70. 

-  Report  of  Comptroller,  etc.,  Documents  of  the  Aldermen, 
vol.  10  (1843-44),  p.  44,  table. 


48  COUNCIL    GOVERNMENT 

in  effect  to  the  deficiency  appropriations  which  so 
often  constitute  a  serious  abuse  in  our  national  and 
state  finances.  Fixed  limits  of  income  were  thus 
disregarded  in  expenditure,  and  the  necessary 
result  was  a  floating  debt  in  the  shape  of  revenue 
bonds,  created  in  violation  of  the  charter  provision 
which  forbade  the  city  to  incur  debt  without  legis- 
lative authority,  except  in  "  anticipation  of  the 
revenue  of  the  year  in  which  such  loan  is  made." 
The  first  serious  appearance  of  this  evil  was  in 
1836,  when  in  addition  to  the  original  budget  of 
$1,271,350  additional  appropriations  aggregating 
$207,263  were  made.^  It  was  partly  this  disre- 
gard of  law  which  rendered  necessary  in  1840 
the  issue  of  $400,000  of  funding  stock.^ 

Additional  appropriations  were  less  extensive 
for  a  few  years  after  this,  but  in  1843  they  began 
again  to  constitute  a  decided  abuse.  It  seems  to 
have  been  at  times  the  motive  of  the  city  fathers 
either  to  give  a  false  appearance  of  economy  before 
the  April  election,  or  at  least  to  embarrass  their 
successors  in  office ;  for  the  tax  levies  were  unduly 
cut  down  and  an  altogether  disproportionate  share 
of  their  amount  was  spent  by  the  outgoing  board 
before  May  i.  This  motive  is  distinctly  charged 
by  Mayor  Morris  in  1843.'^     In  that  year  the  esti- 

1  Proceedings  of  the  Council  approved  by  the  Mayor,  voh  3,  p. 
252  (with  subtraction  of  "  street  opening  ") ;   vol.  4,  pp.  45,  120,  150. 

2  See />ost,  p.  56. 

^  Message,  Proceedings  of  the  Aldermen,  vol.  25,  p.  68. 


THE  BUDGET  49 

mates  of  the  comptroller  were  reduced  in  making 
the  application  for  the  tax  levy  from  $960,000 
to  $850,500,  while  $387,582  of  this  was  already 
spent  up  to  May  9.  The  original  budget  had 
been  only  partial,  and  the  incoming  council  was 
compelled  to  pass  appropriations  considerably  in 
excess  even  of  the  comptroller's  estimates.  Fur- 
ther illustration  of  the  irregularity  of  the  budget- 
ary system  might  be  taken  from  almost  any 
year  after  this.  It  seems  to  have  merited  the  con- 
demnation made  by  Comptroller  John  Ewen  in 
1846:1  — 

"  The  amounts  are  frequently  exceeded  in  large 
sums,  requiring  additional  appropriations.  .  ,  .  As 
a  consequence,  a  temporary  debt  must  be  accumu- 
lated at  the  end  of  the  year,  either  to  be  funded, 
or  to  increase  the  following  year's  taxes.  The 
provision  of  the  Charter  prohibiting  any  sums 
from  being  drawn  from  the  Treasury,  unless  an 
appropriation  shall  first  be  made,  is  rendered 
nugatory,  if  those  charged  with  expenditures  may 
at  pleasure  exceed  the  amount  estimated  for  the 
expenditures  of  the  year,  and  thereby  render  an 
appropriation  absolutely  necessary  to  discharge 
the  obligation  thus  created.  In  such  case  the 
Common  Council  does  not  exercise  the  control 
over  the  Treasury  intended  by  the  Charter,  but 
acts  merely  ministerially,  in  j^assing  whatever  ap- 

^  Communication  to  the  Council,  Proceedings  of  the  Aldermen, 
vol.  30,  p.  135. 
£ 


50  COUNCIL    GOVERNMENT 

propriations  may  be  represented  to  be  necessary, 
and  to  whatever  extent,  although  exceeding  the 
amounts  provided  in  the  taxes  of  the  year." 

The  practice  of  raising  additional  taxes  for  defi- 
ciencies, alluded  to  by  Mr.  Ewen,  began  in  1846^ 
and  continued  yearly  up  to  1857.  In  1850  no  less 
than  1^290,840  was  added  to  the  tax  levy  to  cover 
the  shortage  of  the  preceding  year. 

Besides  the  evil  of  additional  appropriations, 
the  lack  of  clearness  in  the  budget  and  the  fre- 
quent changes  in  the  method  of  grouping  the 
expenditures  show  the  undeveloped  character  of 
the  system.  A  similar  criticism  applies  to  the 
methods  of  accounting  and  to  the  financial  re- 
ports. It  was  at  this  time  the  custom  to  vote 
appropriations  for  the  so-called  '  trust  accounts,' 
i.e.  for  the  redemption  of  revenue  bonds,  for 
expenditures  to  be  recovered  by  assessments,  etc. ; 
and  these  were  often  included  with  the  other  ap- 
propriations in  a  single  alphabetical  list.  During 
the  '40' s,  moreover,  a  division  of  the  budget  was 
usually  made  between  appropriations  authorized 
by  existing  law  and  those  requiring  special  action 
of  the  legislature.  These  three  groups  being 
sometimes  separated,  sometimes  combined,  the 
totals  being  quite  as  often  omitted  as  given  in 
the  ordinances  and  in  the  reports,  and  the  addi- 
tional appropriations  still  further  complicating  the 
problem,  it  must  have  been  very  difficult  for  a  lay- 

1  Laws,  1846,  Chap.  67  (the  tax  law). 


THE    CITY  DEBT  5  I 

man  to  understand  the  city  finances.-^  The  budget, 
however,  was  much  less  detailed  than  now ;  about 
forty  items,  alphabetically  arranged,  made  up  the 
list  of  ordinary  appropriations. 

§  10.    Tlie  City  Debt. 

Although  the  loan  of  $900,000  which,  in  1812, 
began  the  history  of  the  New  York  debt  had  seemed 
to  the  people  of  that  day  a  considerable  burden, 
public  indebtedness  scarcely  became  a  really  impor- 
tant factor  in  the  city  finances  till  the  construction 
of  the  great  Croton  aqueduct.  In  1830  the  entire 
funded  debt  was  only  a  little  over  half  a  million, 
less  than  half  of  one  per  cent  of  the  assessed  valua- 
tion of  the  city,  and  the  interest  on  it  constituted 
but  a  small  element  in  the  budget.  By  the  close 
of  1849  the  debt  had  multiplied  nearly  thirty-fold, 
amounting  to  almost  6  per  cent  of  the  assessed 
valuation,  and  the  annual  interest  was  equal  to 
about  40  per  cent  of  the  total  expenditures  on 
other  ordinary  accounts.  The  funded  debt  in  1830 
was  $2.88  per  capita ;  in  1849  it  was  nearly  $30 
per  capita. 

The  subject  of  a  proper  water  supply  for  the 
city  had  been  almost  constantly  agitated  since  the 
Revolution.^  In  contrast  with  the  hesitation  now 
shown  by  our  cities  in  undertaking  lighting,  street 

^  This  confusion  also  prevents  the  presentation  of  financial  tables 
for  these  years  in  as  full  form  as  is  possible  later  on. 

^  Where  no  other  authority  is  cited,  this  sketch  is  based  on 
King's  Memoir  of  the  Crotoii  Aqueduct,  New  York,  1843,  which 
quotes  all  original  documents  of  importance. 


52  COUNCIL   GOVERNMENT 

railway,  and  other  '  socialistic  '  enterprises  at 
public  expense,  sentiment  in  New  York  (and  in- 
deed the  same  was  true  elsewhere  throughout 
the  country)  was  from  the  very  first  strongly  in 
favor  of  municipal  ownership  of  waterworks. 
Nevertheless,  no  satisfactory  plan  was  discovered, 
and  finally,  in  1799,  the  privilege  of  furnishing 
water  was  given  to  a  private  company,  in  which, 
however,  the  city  held  some  stock.  The  citizens 
suffered  much  under  this  arrangement,  for  the  com- 
pany merely  pumped  an  insufificient  supply  from 
a  large  well.  Numerous  projects  were  discussed 
from  time  to  time,  most  of  which  contemplated  the 
Bronx  as  a  source.  At  last  in  1833  a  commission 
was  created  for  investigating  the  subject.  It  re- 
ported in  favor  of  the  Croton  river  as  a  supply, 
and  in  1835  presented  a  more  detailed  plan,  esti- 
mating the  cost  at  $5,500,000.  The  city  council 
endorsed  the  report  and  submitted  to  the  voters 
the  question  whether  the  work  should  be  under- 
taken. The  magnitude  of  the  enterprise  might 
well  have  appalled  the  people ;  possibly  had  they 
known  how  far  the  estimates  would  be  exceeded, 
they  would  have  rejected  the  scheme.  The  vote 
was  17,330  yeas,  5963  nays,  and  the  largest 
majorities  in  favor  of  the  aqueduct  were  found  to 
be  in  the  wards  most  heavily  assessed. 

The  great  work  was  placed  in  the  hands  of  com- 
missioners appointed  by  the  governor — an  early 
instance  of  state  control  over  an  essentially  local 


THE    CITY  DEBT  53 

enterprise.  The  chief  reason  advanced  for  this 
arrangement  was  that  the  aqueduct  required  the 
appropriation  of  land  outside  New  York  county. 
There  were  not  a  few  conflicts  of  authority  between 
this  board  and  the  city  council,  the  right  of  the 
state  commissioners  to  lay  distributing  pipes  in  the 
city  being  especially  called  in  question.^  Party 
politics  were  only  a  trifle  less  prominent  in  the 
matter  than  in  the  management  of  the  second  great 
aqueduct  a  decade  ago.  When  the  Whigs  gained 
power  in  1839,  the  entire  membership  of  the  com- 
mission was  changed ;  five  years  later  a  Demo- 
cratic administration  reinstated  the  original 
appointees.  In  spite  of  all  this,  there  was  com- 
paratively little  complaint  as  to  the  honesty  or 
efficiency  of  the  management  of  either  set  of  com- 
missioners. Owing  to  speculation  in  the  lands 
condemned  for  the  works,  to  the  disturbed  financial 
condition  of  the  times,  and  to  the  substitution  of 
the  High  Bridge  over  the  Harlem  for  an  inverted 
siphon,  the  cost  of  the  aqueduct  was  considerably 
enhanced,  and  its  completion  was  delayed.  The 
outlay  for  the  aqueduct  proper,  including  the 
Murray  Hill  reservoir,  was  $8,917,501,  while 
$2,097,251  was  spent  on  distributing  pipes  during 
the  period  we  are  studying.^ 

'  See  concerning  this  controversy,  and  concerning  the  general 
work  of  the  water  commissioners,  report  of  special  committee. 
Documents  of  the  Aldermen,  vol.  7,  No.  32. 

2  Manual,  1850,  p.  259. 


54  COUNCIL    GOVERNMENT 

The  laws  authorizing  bonds  for  the  aqueduct 
had  made  no  special  provision  for  their  interest 
or  redemption  ;  and  in  fact,  during  the  years  in 
which  the  work  was  in  progress,  the  interest  on 
money  already  borrowed  was  met  by  further  long- 
time bonds,  no  less  than  $1,577,459  being  issued 
for  this  purpose.  In  view  of  these  circumstances, 
and  of  the  depressed  financial  condition  of  the 
time,  the  credit  of  the  city  naturally  began  to 
suffer.  Eight  and  a  half  millions  of  bonds  had 
been  floated  at  5  per  cent  before  1841  ;  but  the 
last  loans  had  fallen  considerably  below  par,  so 
that  the  real  interest  had  averaged  'j\  per  cent.^ 
When,  accordingly,  the  issue  of  $3,500,000  more 
was  authorized,  part  of  this  sum  was  borrowed 
on  temporary  notes,  in  anticipation  of  funding 
when  credit  should  improve.  This  funding  was 
actually  accomplished  several  years  later,  at  5  per 
cent  interest.^  Two  influences  combined  to  bring 
about  this  more  satisfactory  state  of  city  credit. 
In  1842  ^  the  collection  of  taxes  to  pay  interest  on 
the  bonds  was  at  last  commenced,  and  in  the  next 
year  a  general  reorganization  of  the  sinking  fund 
was  made  by  an  ordinance,'*  which  the  state  legis- 

1  A  full  account  of  these  loans  is  given  in  a  communication  of 
the  comptroller,  Documents  of  the  Aldermen,  vol.  8,  No.  13. 

2  Compare  Comp.  Rep.,  1844,  p.  11 ;  1847,  P-  21 ;  Manual, 
1850,  p.  258. 

^  Valentine,  p.  524. 

*  Proceedings  of  the  Council  approved  by  the  Mayor,  vol.  11, 
P-  153- 


THE    CITY  DEBT  55 

lature,  in  1845/  declared  could  not  be  amended 
except  by  its  consent. 

The  main  modification  of  the  debt  system  which 
this  measure  introduced  was  the  creation  of  a 
separate  '  sinking  fund '  for  interest.  The  re- 
demption fund  was  continued  with  practically  the 
same  revenues  as  before,  but  a  policy  of  rapid 
disposition  of  the  lands  held  by  the  city,  for  the 
benefit  of  the  fund,  was  inaugurated.  To  the 
interest  fund  were  pledged  practically  all  the  re- 
maining revenues  not  derived  from  taxation.  By 
far  the  most  important  were  the  Croton  water 
rents,  which  grew  so  rapidly  that  in  1850  they 
amounted  to  $458,951,^  four-sevenths  of  the  total 
income  of  the  interest  fund.  The  receipts  from 
docks,  which  increased  from  $34,397  in  1844  to 
$108,583  in  1850,  with  those  from  ferries  and 
from  excise  licenses,  made  up  the  greater  part  of 
its  other  revenues.  The  ordinance  required  that, 
in  case  the  interest  on  the  debt  could  not  be  met 
from  these  sources,  the  balance  must  be  raised  by 
taxation.  The  water  rents  were  naturally  small 
at  the  start,  and  considerable  sums  had  to  be  con- 
tributed from  taxes,  but  by  185 1  the  fund  was 
able  to  pay  the  interest  unaided. 

No  provision  was  made  in  this  ordinance  of 
1844     for    any    mutual    adjustment   between    the 

1  Laws,  1845,  Chap.  225. 

-  Comp.  Rep.,  1858,  pp.  58,  59.  For  further  figures  for  1850, 
see  Table  IV,  AppeiiiJix. 


56  COUNCIL    GOVERNMENT 

redemption  and  interest  funds,  or  between  them 
and  the  general  account.  The  system  was  rigid 
and  mechanical,  and  frequent  interferences  of  law 
have  since  been  necessary  to  adjust  it. 

Besides  the  water  debt,  four  other  compara- 
tively insignificant  loans  were  contracted  between 
1830  and  1849.  'Public  building  stock'  was 
issued  in  1835-38,^  for  the  Tombs  prison  and 
other  minor  building  projects.  Three  hundred 
and  seventy-five  thousand  dollars  of  bonds  were 
required  to  pay  for  buildings  blown  up  to  prevent 
the  spread  of  the  great  fire  of  1835  ;^  while,  to  aid 
temporarily  the  banks  and  insurance  companies 
weakened  by  the  disaster,  the  city  borrowed  over 
a  million  more.^ 

In  1840  it  became  necessary  once  more  to  fund 
the  floating  obligations  of  the  city.^  These  had  been 
swollen,  as  we  have  seen,  by  the  additional  appro- 
priations, and  had  been  further  increased  by  several, 
apparently  scarcely  legal,  expenditures  for  perma- 
nent public  works. ^  By  these  means  the  floating 
debt  had  risen  to  no  less  than  $1,636,475  in  1839,® 
a  considerable  part  of  this  being  borrowed  from 

1^500,000;  Comp.  Rep.,  1838,  p.  8. 

2  Manual,  1850,  p.  257. 

3  $1,071,242  up  to  1837.     Comp.  Rep.,  1836,  p.  no. 

*  By  an  issue  of  $400,000,  payable  in  eight  annual  instalments, 
beginning  1841.  Laws,  1840,  Chap.  327;  cf.  Comp.  Rep.,  1839, 
p.  10. 

5  Black,  p.  60. 

6  Comp.  Rep,,  1839,  p.  9. 


THE    CITY  DEBT  5/ 

moneys  received  on  the  water  loan,  pending  their 
actual  outlay.  In  partial  explanation  of  these 
large  figures,  it  must  be  remembered  that  at  this 
time  taxes  were  paid  less  promptly  than  now,  since 
there  was  no  penalty  for  non-payment  till  February 
I  ;  and  that,  moreover,  no  provision  existed  for  the 
addition  of  percentages  to  the  yearly  taxes  to  cover 
deficiencies  in  collection.  '  Public  building  stock, 
number  2,'  the  issue  of  which  began  in  1846,  was 
intended  to  pay  for  various  new  buildings  on  Ran- 
dall's island.^  Partly  with  a  view  to  protect  the 
holders  of  water  stock,  partly  because  the  expendi- 
tures for  which  they  were  designed  could  scarcely, 
with  propriety,  be  thrown  upon  the  distant  future, 
both  these  last-mentioned  loans  were  made  pay- 
able, from  taxation,  in  annual  instalments  begin- 
ning immediately  after  the  contraction  of  the  debt. 
The  net  result  of  the  debt  operations^  during 
the  twenty  years  we  have  been  considering  was 
that,  at  the  close  of  1849,  the  outstanding  bonds, 
redeemable  from  the  sinking  fund,  amounted  to 
$14,876,783,  and  those  payable  from  taxation  to 
$365,000,  while  revenue  bonds,  which  had  been 
again  rapidly  growing  since  1840,  amounted  to 
$2,223,453.  The  sinking  fund  had  accumulated 
$3,690,866,  leaving  the  net  indebtedness  of  the 
city  $13,774,370. 

1  Laws,    1845,  ^'liap.  253.     ^350,000  outstan(lii)<,f  at  the  end  of 
1849. 

2  Manual,  1850,  pp.  250  ff.     See,  also,  Appendix,  Table  V. 


58  COUNCIL    GOVERNMENT 

§  II.    Special  Assessments. 

The  construction  of  local  improvements  by- 
assessment  was  greatly  extended  during  this 
period,  especially  in  the  decade  1 830-1 840.  A 
large  number  of  streets,  laid  out  by  the  commis- 
sioners of  1807,  were  now  first  opened  and  im- 
proved. The  amount  of  assessment  expenditures 
was  vastly  greater,  relatively  to  those  on  ordinary 
account,  at  that  time  than  it  is  now.  For  the  ten 
years  beginning  1830  they  averaged  annually 
almost  exactly  half  a  million  dollars,  while  the 
average  amount  of  taxes  levied  was  only  $968,000. 
In  1837  the  outlay  on  these  accounts  reached 
1^1,113,838,  almost  equalling  the  entire  sum  raised 
by  taxation. 1  Fifty  years  later,  in  the  decade 
beginning  1880,  the  expenditures  from  assess- 
ments averaged  only  about  three  times  as  much 
as  in  the  earlier  period,  while  the  annual  tax  levy 
had  multiplied  fully  thirty-fold.  The  use  of  assess- 
ments, however,  was  considerably  less  from  1840 
to  1849  than  during  the  preceding  years. 

No  changes  of  importance  were  made  in  the 
administration  of  the  system  during  this  time. 
There  did  not  exist  a  separate  assessment  fund, 
but  works  were  paid  for  out  of  the  general  treasury 
account,  into  which  assessments  were  turned  as 
collected.  On  the  whole,  the  system  worked 
fairly  well  in  spite  of  somewhat  rudimentary 
methods,  and  we  hear  little  of  losses  to  the  city 
by  failure  to  collect  assessments. 

1  Comp.  Rep.,  1837,  p.  17. 


GENERAL    CHARACTER    OF   THE   PERIOD      59 

There  was  considerable  opposition  to  the  '  better- 
ment '  principle  throughout  the  first  half  of  the 
century.^  It  was  repeatedly  but  unsuccessfully 
assailed  in  the  courts  as  unconstitutional.  More- 
over, an  attempt  was  made  in  the  constitutional 
convention  of  1846  to  abolish  assessments  entirely, 
but  it  met  with  comparatively  little  support.  The 
final  word  of  the  courts  justifying  the  system  under 
the  constitution  as  then  adopted,  was  spoken  in 
185 1,  in  the  case  of  The  People  vs.  The  Mayor, 
etc.,  of  Brooklyn.^ 

§  1 2.  General  CJiaracter  of  the  Period.  Conclu- 
sio7i. 

The  charter  of  1830  failed  signally  to  bring 
about  the  radical  changes  for  which  it  was  de- 
signed. This  was  partly  due  to  imperfection  in 
its  provisions,  but  more  to  the  wilful  disregard  of 
their  spirit,  and  even  of  their  letter,  by  the  city 
council.  We  have  seen  how  little  real  effect  in 
regulating  expenditure  was  accomplished  by  the 
introduction  of  the  budget.  The  other  reforms 
sought  proved  equally  unsuccessful.  The  fact 
that  the  members  of  the  two  boards  of  the  council 
were  elected  in  equal  number,  from  the  same  dis- 
tricts (one  from  each  ward),  by  the  same  voters, 
and  for  the  same  term,  defeated,  to  large  extent, 
the  object  of  making  them  a  check  upon  one 
another.     By   allowing  the   passage    of    measures 

^  Rosewater,  Special  Assessments,  pp.  27-29. 
2  4  N.  Y.  419. 


6o  COUNCIL    GOVERNMENT 

over  the  mayor's  disapproval  by  mere  majority 
vote,  the  veto  power  was  made  of  httle  avail.  By 
leaving  to  the  council  the  appointment  of  all  execu- 
tive officers,  except  the  mayor,  and  giving  them  no 
definite  term  of  office,  the  new  charter  enabled  the 
legislative  boards  still  to  exercise  very  great  con- 
trol over  administrative  affairs. 

Despite  these  defective  features  of  the  law,  it 
would  have  been  possible  in  considerable  degree 
to  effect  that  separation  of  powers  which  had  been 
designed,  had  it  not  been  for  the  unwillingness  of 
the  council  to  part  with  the  large  administrative 
control  it  had  so  long  enjoyed.  The  city  fathers 
of  183 1,  declared  Mayor  Morris  eleven  years  later,^ 
had  mostly  held  office  under  the  old  regime,  and 
wilfully  or  by  mere  force  of  custom,  they  followed 
precedent  rather  than  the  spirit  of  the  new  charter. 
They  did,  to  be  sure,  organize  somewhat  more  care- 
fully the  various  executive  departments,  but  they 
left  to  them  practically  nothing  but  clerical  duties. 
The  aldermen  and  assistants  themselves,  through 
joint  committees,  dictated  even  the  details  of  ad- 
ministration, the  very  name  of  '  executive  com- 
mittees '  which  these  officially  retained  showing 
how  little  they  confined  themselves  to  legislative 
functions.^     Repeated  and  bitter  complaints  were 

1  Message,  1843,  Proceedings  of  the  Aldermen,  vol.  25,  pp. 
62,  63. 

^  See  Ordinances,  revised  1845.  There  were  twenty-one  such 
committees  then. 


GENERAL    CHARACTER    OF   THE  PERIOD      6 1 

made  by  the  mayors  as  to  the  maladministration 
of  these  committees  and  their  lack  of  responsibility 
to  the  chief  executive  or  to  the  council  itself,  and 
there  was  certainly  some  basis  for  their  criticisms. 
An  attempt  was  made  in  1841  ^  to  lessen  this  irre- 
sponsibility by  requiring  committees  to  make  re- 
ports of  their  every  meeting  to  the  council,  but 
this  ordinance  was  soon  repealed  or  fell  into  dis- 
use ;  while  even  during  its  continuance  Mayor 
Morris  declared  that  there  were  practically  given 
over  to  "these  Executive  Committees  the  legisla- 
tive powers  of  the  Common  Council ;  so  that  in 
fact  the  Common  Council  became  subdivided  into 
a  number  of  sub-legislatures,"  whose  acts,  never 
submitted  to  the  mayor,  were  subject  to  no  super- 
vision whatever.^  He  further  dwelt  at  length  on 
the  corruption  of  the  council,  and  especially  on 
the  custom  of  letting  contracts  to  its  members  and 
their  friends  —  charges  which  he  bore  out  by  cit- 
ing specific  cases.  The  large-hearted  aldermen 
and  assistants  of  those  days  deemed  it  a  matter 
of  principle  to  show  Gotham  as  a  hospitable  and 
jovial  city,  and  many  a  case  of  wine  or  box  of 
cigars,  many  a  sumptuous  banquet  even,  was 
found  charged  to  the  account  of  'contingencies 
for  the  Common  Council '  ;  while  quite  as  cheer- 
fully read  the  bills  for  carriage  hire  that  were  paid 
from  the  city  treasury. 

1  See  Ordinances,  revised  1845,  p.  6. 

2  Message  above  cited. 


62  COUNCIL    GOVERNMENT 

Had  the  city  council  been  free  from  partisan  in- 
fluences, and  had  the  officials  who  carried  out  the 
will  of  the  committees  been  men  of  thorough  train- 
ing and  practically  permanent  in  their  positions, 
the  council's  administration  might  have  approached 
in  excellence  more  nearly  to  that  of  modern  Eng- 
lish cities.  But  unfortunately  all  this  was  far  from 
being  the  case.  The  interference  of  party  politics 
was  constant.^  In  the  first  election  for  a  mayor 
(1834),  excitement  reached  a  pitch  beyond  any- 
thing we  witness  in  these  days.  In  the  sixth  ward 
a  mob  seized  the  polls  and  destroyed  the  ballots, 
and  the  militia  had  to  be  called  out.^  Later  cam- 
paigns were  hardly  less  violent.^  Party  domina- 
tion in  the  city  changed  frequently.  The  council's 
absolute  power  of  appointment  was  exercised 
strictly  from  partisan  motives.  An  illustration  of 
the  absurd  extent  to  which  the  patronage  system 
was  sanctioned  is  found  in  the  police  act  of  1844,^ 
which  provided  that  the  alderman,  assistant  alder- 
man, and  assessors  of  each  ward  should  jointly 
nominate  the  captain,  assistant  captain,  and  all 
the  policemen  for  that  ward.     Under  such  circum- 

1  See,  e.g..  Mayor  Harper's  message,  1844,  Proceedings  of  the 
Aldermen,  vol.  27,  p.  11. 

2  Memorial  History  of  New  York,  vol.  3,  p.  340. 

^  Thus  we  hear  of  heavy  election  frauds  in  1837,  and  of  threats 
of  violence  in  1838,  as  well  as  of  special  precautionary  measures  in 
1839.  Communication  from  the  mayor,  etc.,  Documents  of  the 
Aldermen,  vol.  5,  No.  29. 

*  Laws,  1844,  Chap.  315. 


GENERAL    CHARACTER    OF   THE  PERIOD      63 

Stances,  declared  Mayor  Havemeyer,^  elections  to 
the  council  "  cannot  but  be  regarded  in  some  degree 
as  a  pecuniary  prize.  ...  A  change  in  the  politi- 
cal complexion  of  the  Common  Council  is  generally 
followed  by  a  change  of  all  the  officers  in  the  gov- 
ernment, from  the  highest  to  the  most  subordinate  ; 
and  this  change  has  now  become  almost  annual." 

And  yet,  however  serious  were  the  charges  by 
contemporaries  against  the  council's  administration, 
we  may  not  at  once  conclude  that  it  was  excessively 
bad  as  compared  with  other  periods.  The  people 
who  at  that  time  reviled  government  by  the  com- 
mon council,  could  not  compare  it  with  govern- 
ment by  irresponsible  executive  officers  such  as 
came  later.  Imperfect  as  was  the  municipal  ad- 
ministration from  1830  to  1849,  it  is  very  doubtful 
whether  it  would  have  been  better  had  the  restric- 
tion in  the  powers  of  the  council  planned  by  the 
city  convention  of  1829  been  actually  accomplished. 

From  the  purely  financial  standpoint,  the  two 
main  features  of  the  period  we  have  been  consid- 
ering were  the  introduction  of  specific  appropria- 
tions, and  the  construction  of  the  Croton  aqueduct. 
The  budget,  indeed,  was  far  from  carefully  man- 
aged, but  foundations  for  a  more  satisfactory  sys- 
tem had  been  laid ;  while  the  aqueduct  was  an 
enterprise  of  which  the  city  was  justly  proud. 

1  Message,  1845,  Proceedings  of  the  Aldermen,  vol.  29,  p.  27. 
The  changes  in  the  list  of  city  officers  given  in  the  Manuals  seem 
to  bear  out  these  statements. 


64  COUNCIL    GOVERNMENT 

There  was  general  increase  of  city  expenditures 
during  the  twenty  years  from  1830  to  1850.  New 
York  was  beginning  now  to  take  on  more  of  its 
modern  metropolitan  character.  Its  population  in- 
creased from  197,112  in  1830,  to  515,547  in  1850. 
New  municipal  activities  arose,  and  expenditures 
naturally  grew  in  greater  ratio  than  population. 
The  total  outlay  for  ordinary  purposes  increased 
from  $676,618  in  1830,  to  $3,368,163  in  1850,  be- 
sides $584,085  for  interest  paid  from  the  sinking 
fund  in  the  latter  year.^  It  appears,  however,  that 
after  the  people  came  to  realize  the  burden  of  the 
water  debt,  they  retrenched  in  every  possible  way. 
A  comparison  of  the  specific  expenditures  for  1830, 
1840,  and  1850,  shows  that  during  the  latter  decade 
of  the  period,  those  forms  of  expenditure  that  had 
been  inherited  from  the  earlier  days  —  cleaning 
streets,  almshouse,  docks,  etc.  —  grew  but  slowly. 
On  the  other  hand,  aside  from  the  great  increase 
of  interest  payments,  the  expenditure  for  public 
schools  and  police  now  first  took  on  large  pro- 
portions, the  former  increasing  from  $25,995  in 
1830,  to  $374,553  in  1850,  the  latter  from  $99,521 
to  $487,541.  Education  at  public  expense  is,  of 
course,  of  comparatively  recent  introduction.  The 
establishment  of  a  day  police  was  the  outcome  of 
direst  necessity,  the  disorders  at  election  time  hav- 
ing especially  emphasized  the  need.  For  some 
years  the  '  watch '  continued  to  be  much  more  im- 

^  Comp.  Rep.,  1830  and  1850. 


GENERAL    CHARACTER    OF  THE  PERIOD       65 

portant  than  the  poHce,  but  finally  the  government 
of  the  two  was  merged,  and  the  guarding  of  public 
safety  by  day  soon  became  of  equal  consequence 
with  that  by  night.  Another  considerable  addition 
to  the  burden  of  taxation  was  the  state  mill  tax, 
first  levied  in  1842.  These  added  expenditures, 
together  with  the  devotion  of  all  the  revenues 
from  miscellaneous  sources  to  the  sinking  funds, 
caused  a  rapid  increase  in  the  tax  rate  from  1830 
to  1850,^  and  mutterings  of  discontent  began  to  be 
heard. 

1  Forty-two   cents  in  1830,  54.7  in   1840,  113.75    '"    1850,   the 
assessed  valuation  having  meantime  increased  about  130  per  cent. 
Report  of  Senate  (Fassett)  Committee  on  Cities,  New  York  Senate 
Documents,  1891,  No.  80,  p.  2266. 
F 


CHAPTER    IV 

THE    PERIOD    OF    LEGISLATIVE    INTERFERENCE 
I 850-1 869 

Up  to  1849  New  York  was  practically  governed 
by  its  common  council.  The  executive  branch 
had  little  power.  Moreover,  with  some  excep- 
tions, the  state  legislature  left  the  council  free  to 
act  as  it  deemed  best  —  it  was  largely  a  time  of 
municipal  home  rule.  All  this  became  almost  com- 
pletely changed  before  the  close  of  the  period  on 
which  we  now  enter.  The  first  step  in  the  pro- 
cess, the  removal  of  purely  executive  powers  from 
the  council,  was  accomiDlished  almost  at  one  blow 
in  1849;  the  motive  therefor  was  chiefly  desire 
for  better  government.  The  transfer  of  control 
over  the  city  to  state  authorities  was  more  gradual. 
It  was  brought  about  in  three  ways :  (i)  by  usur- 
pation by  the  state  of  the  appointment  of  many 
important  executive  officers ;  (2)  by  the  creation 
of  a  separate  board  of  county  supervisors,  so  con- 
stituted as  to  be  largely  in  sympathy  with  the 
state  administration  ;  and  (3)  by  direct  interference 
of  the  legislature,  especially  in  the  budget.  The 
motive  for  this  state  control  was  to  a  considerable 
degree  partisan,  and  must  be  sought  in  connection 

66 


THE    CHARTER    OF  184^  6y 

with  the  peculiar  political  conditions  before  and 
during  the  war  time. 

§  13.    The  Charter  of  id>4.(). 

For  some  years  before  1849  general  and  grow- 
ing dissatisfaction  had  been  felt  over  the  failure 
to  accomplish  that  division  of  powers  in  the  gov- 
ernment contemplated  by  the  charter  of  1830. 
The  dissatisfaction  became  so  strong  by  1846  that 
a  convention  of  delegates  elected  by  the  people 
was  held  for  revising  the  charter.  This  body  pro- 
posed more  specific  provisions  for  enforcing  the 
separation  of  powers,  and  stricter  checks  upon 
the  common  council.^  But  the  absorption  of  pop- 
ular attention  in  the  beginning  of  the  Mexican 
War,  in  the  congressional  election,  and  in  the  state 
constitutional  convention  then  in  session,  withdrew 
interest  almost  entirely  from  the  city  convention. 
Accordingly  the  poll  on  the  adoption  of  the  char- 
ter was  decidedly  small,  and  there  was  a  slight 
majority  against  it.^  Yet  the  work  of  the  conven- 
tion had  not  been  without  effect.  Many  of  its  pro- 
posed measures  were  copied  word  for  word  in  the 
charter  actually  adopted  in  1849,  while  others 
were  incorporated  in  the  amendments  of  1853. 
One  provision  suggested  by  the  convention,  which 
never  found  its  way  into  actual  law,  is  important 

^  The  charter  proposed  and  the  address  to  the  people  are  given 
in  the  Journal  of  the  Convention,  1846,  pp.  698  ff. 

-  5863  for,  7195  against.  32,919  votes  were  cast  at  the  same  elec- 
tion on  the  state  constitution.  iVew  York  Tribune,  November  7,  1846. 


68      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

as  showing  the  feeHng  regarding  the  abuse  of 
additional  appropriations  and  consequent  tempo- 
rary loans,  as  well  as  the  desire  to  bring  the  crea- 
tion of  funded  debt  under  the  immediate  control  of 
the  joeople  rather  than  under  the  less  discriminat- 
ing supervision  of  the  legislature  :  — 

"  No  money  shall  be  borrowed  on  the  credit  of 
the  corporation  unless  the  common  council  shall 
by  law  direct  the  same  in  anticipation  of  the  reve- 
nue for  the  year  in  which  the  same  shall  be  bor- 
rowed, and  shall  provide,  in  the  same  law,  for 
repaying  the  same  out  of  sncJi  revenue  ;  ^  but  money 
may  be  raised  by  loan  whenever  the  law  providing 
for  the  same  shall  be  passed  in  each  board  by  a 
majority  of  all  the  members  elected,  and  shall  be 
approved  by  the  electors  at  any  charter  election." 

The  charter  of  1849,'^^  which  was  destined  to 
work  a  revolution  in  city  affairs,  was  passed  by  the 
legislature  and  then  submitted  to  popular  vote. 
Owing,  doubtless,  to  the  development  of  public 
sentiment  and  to  the  absence  of  distracting  politi- 
cal conditions,  it  met  a  much  more  favorable  re- 
ception than  the  proposed  charter  of  1846.  The 
vote  was  19,339  for,  1478  against,  the  charter.^ 
Partisan  motives  had  little  to  do  with  the  adoption 
of  this  law.  It  had  been  urgently  pushed  by  a 
non-partisan  reform  organization,  and  the  practical 
unanimity  of  the  vote  shows  how  general  was  the 
belief  that  it  was  a  real  forward  step. 

^  The  italics  are  mine.  ^  Laws,  1849,  Chap.  187. 

^  N^eio  York  Tribune,  A^xW  14,  1849. 


THE    CHARTER    OF  1849  69 

The  fundamental  feature  of  the  new  law  was  the 
establishment  of  independent  administrative  de- 
partments, and  the  almost  entire  removal  of  execu- 
tive power  from  the  council.  The  purpose  of 
following  closely  the  federal  and  state  constitu- 
tions, which  had  not  been  fulfilled  under  the  act 
of  1830,  was  at  last  carried  out.  "Neither  the 
common  council,"  declared  the  charter,  "  nor  any 
committee  or  member  thereof,  shall  perform  any 
executive  business  whatever";  while,  to  prevent 
that  collusion  between  the  two  boards  of  which 
complaint  had  often  been  made,  they  were  given 
"  concurrent  powers  and  a  negative  on  each  other's 
proceedings,"  and  were  forbidden  to  appoint  joint 
committees  save  one  on  accounts.  Heretofore  the 
council  had  been  left  to  create  such  executive  de- 
partments as  it  would,  and  to  appoint  their  officers, 
but  the  charter  of  1849  expressly  established  ten 
departments,  whose  heads  were  to  be  elected  by 
the  people  for  a  three  years'  term.  The  move- 
ment of  the  democratic  spirit  is  strikingly  illus- 
trated in  the  change  from  the  custom  of  half  a 
century  before,  when  all  the  executive  officers  of 
the  city,  including  the  mayor,  were  appointive,  to 
this  law,  which  gave  directly  to  the  people  the 
selection  of  a  dozen  executive  officers  besides  the 
common  council.  These  departments,  which  were 
chiefly  single  headed,  were  required  to  make  an- 
nual reports  to  the  council.  * 

Only  a   few   provisions   regulating  the   finances 


70      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

appear  in  the  charter  of  1849.  The  evil  of  allow- 
ing members  of  the  council  to  be  interested  in 
public  contracts,  which,  though  forbidden  by  the 
former  law,  had  yet  flourished  considerably,  was 
more  emphatically  defined  and  prohibited.  The 
regulation  of  the  budget  was  still  left  rather  indefi- 
nite, though  clauses  were  added  declaring  that 
appropriations  must  be  based  on  "  specific  and 
detailed  statements  in  writing  of  the  several  heads 
of  departments,"  and  that  "no  expense  shall  be 
incurred  by  any  of  the  departments  or  officers 
thereof,  whether  the  object  of  expenditure  shall 
have  been  ordered  by  the  common  council  or  not, 
unless  an  appropriation  shall  have  previously  been 
made."  This  last  emphatic  provision  seems  to  im- 
ply that  additional  appropriations  had  been  some- 
times forced  upon  the  council  by  executive  officers 
after  the  expense  had  been  actually  incurred.^ 
These  but  slightly  more  detailed  restrictions  had 
little  effect  in  bringing  about  a  more  systematic 
or  satisfactory  budget  system. 

§  14.    TJie  CJiartcr  Amendments  of  iZ^^i. 

Further  amendments  to  the  charter,  chiefly  in- 
tended to  check  certain  abuses  of  power  by  the 
city  council,  were  made  by  a  law  of  1853.  As  in 
1849,  this  act  was  the  result  of  general  popular 
agitation,  irrespective  of  party. 

As  is  usually  the  result  when  improvement  is 
sought   by  changes    in    outer    organization    only, 

1  This  charge  had  been  made  also  by  Mr.  Ewen,  ante,  p.  49. 


THE    CHARTER  AMENDMENTS   OF  1833        7 1 

without  a  change  in  popular  spirit,  the  high  hopes 
based  upon  the  charter  of  four  years  before  had 
been  signally  disappointed.  The  city  fathers,  in 
spite  of  the  restriction  of  their  domain,  had  found 
scope  for  an  amazing  amount  of  corruption.  We 
have  seen  that  already  during  the  decade  preced- 
ing the  charter  of  1849  the  council  was  far  from 
spotless,  and  we  should  hardly  have  looked  for 
improvement  in  its  character  after  the  loss  of 
prestige  caused  by  that  measure.  It  was  precisely 
at  this  time  that  municipal  franchises,  ever  a  pro- 
lific source  of  jobbery,  began  to  take  on  new  im- 
portance. Though  the  Harlem  railway  had  been 
established  considerably  earlier,  no  other  street 
railways  were  introduced  till  185 1.  The  fran- 
chises were,  at  this  period,  granted  by  the  council 
with  no  legislative  regulation.  No  less  than  four 
important  roads  were  authorized  in  1851-2,  with- 
out a  cent  of  compensation  to  the  city,  and  charges 
of  corruption  grew  rife.  The  popular  indignation 
finally  burst  over  the  attempt  to  grant,  despite  the 
mayor's  veto,  the  right  to  lay  tracks  in  Broad- 
way, an  attempt  which  only  an  injunction  pre- 
vented from  accomplishment.  This  was  a  scheme 
of  the  same  Jacob  Sharp,  who,  fully  thirty-two 
years  later,  by  still  more  gigantic  corruption,  actu- 
ally secured  this  franchise.  The  city  comptroller, 
Mr.  A.  C.  Flagg,  voiced  emphatically  even  at  this 
early  day  the  opinion  that  the  city  should  receive 
large  pay  for  street  railway  and  similar  privileges. 


72      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

In  connection  with  the  ferries,  also,  there  had  been 
no  little  corruption,  while  fraud  and  bribery  in  let- 
ting city  contracts  combined  to  make  the  council 
of  1851-2,  the  'Forty  Thieves,'  a  byword  for 
many  years. ^ 

Another  influence  which  led  to  the  reform  move- 
ment of  1853  was  a  great  abuse  of  the  appropri- 
ating power  in  the  previous  year.  The  evil  of 
additional  appropriations  had  been  by  no  means 
effectually  attacked  by  the  charter  of  1849.  The 
original  budget  for  1852,  which  had  been  cut 
down  but  slightly  from  the  departmental  and 
comptroller's  estimates,  called  for  a  tax  levy  of 
$3,380,511;  but  no  less  than  $828,100  of  addi- 
tional appropriations  were  voted  in  the  latter  part 
of  the  year.  Most  of  this  amount  had  to  be  in- 
corporated with  the  taxes  of  1853,^  swelling  the 
tax  rate  to  123  cents,  as  compared  with  97  cents 
the  year  before.  This  sudden  leap  in  taxes  was 
the  signal  for  general  indignation. 

Mr.  Flagg,  the  new  comptroller,  exposed  these 
various  evils  unsparingly,  and  was  hailed  loudly 
as  the  champion  of  reform.  A  great  mass  meet- 
ing,  presided  over    by   Peter   Cooper,  was   held.^ 

^  For  general  account  of  these  various  frauds,  see  Comp.  Rep., 
1852,  pp.  12  ff.,  1853,  pp.  17  ff.;  Nezu  York  Tribune,  December 
29,  1852,  June  6,  8,  1853;  A-eiu  York  Times,  February  9,  1890; 
Report  of  Special  Committee  consisting  of  New  York  Members,  on 
the  Charter  of  1853,  Assembly  Documents,  1853,  No.  82. 

-  Comp.  Rep.,  1851,  p.  20;    1852,  p.  20. 

"^  New  York  Tribune,  March  7,  1853.  See  also  second  meet- 
ing, ibid.,  June  6. 


THE    CHARTER  AMENDMENTS   OF  1833        73 

The  speakers  charged  both  political  parties  with 
corruption,  and  declared  that  good  government 
demanded  the  active  interest  of  the  better  classes 
at  the  primaries  and  polls ;  nevertheless,  they  felt 
that  considerable  improvement  might  be  effected 
by  further  safeguards  about  the  action  of  the 
council.  The  legislature  adopted  essentially  the 
amendments  proposed  by  the  reformers,^  and 
submitted  them  to  the  vote  of  the  city  —  the  last 
change  in  the  charter  for  which  popular  sanction 
was  sought.  The  large  and  nearly  unanimous 
vote^  in  favor  of  the  law  shows  how  strong  was 
the  public  sentiment. 

Considerable  but  apparently  unwarranted  expec- 
tation of  reform  was  based  on  an  increase  in  the 
number  of  the  lower  board  of  the  council.  Sixty 
'  councilmen,'  elected  from  as  many  districts,  were 
to  take  the  place  of  the  assistant  aldermen.  A 
provision  by  which  half  of  the  aldermen  should  be 
elected  each  alternate  year,  instead  of  all  together, 
was  designed  to  place  a  still  further  check  within 
the  council  itself.  Moreover,  a  two-thirds  vote  was 
now  first  required  to  override  the  mayor's  disap- 
proval. 

The  specific  evils  that  had  been  so  conspicuous 
were  vigorously  attacked.  The  law  prescribed 
that  all  leases  of  ferries,  docks,  etc.,  and  all  sales 
of  land  and  of  franchises,  must  be  at  auction  to 

1  Laws,  1853,  Chap.  217. 

2  36,672  to  3351.     Nnv  York  I'ribune,  June  8,  1853,  p.  4. 


74      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

the  highest  bidder,  and  for  not  over  ten  years ; 
that  all  work  and  supplies  valued  at  over  $250 
should  be  furnished  by  contract  on  competitive 
bids;  and  that  no  additional  allowances  beyond  the 
legal  amount  should  be  made  on  any  contract. 
Severe  penalties  were  fixed  for  giving  or  accepting 
bribes.  The  establishment  of  a  special  auditing 
bureau  in  the  finance  department  was  expected  to 
prevent  many  fraudulent  payments.  The  patron- 
age of  the  council  had  been  greatly  diminished  by 
the  charter  of  1849,  yet  the  absurd  law  giving  its 
members  the  appointment  of  policemen  had  still 
persisted ;  this  power  was  now  conferred  on  the 
mayor,  recorder,  and  city  judge.  Although  the 
abuse  of  appropriations  had  been  so  marked  in 
1852,  the  only  direct  attempt  to  improve  the  bud- 
getary system  was  the  futile  one  of  requiring  ap- 
propriations to  be  first  voted  by  the  board  of 
councilmen.  The  change  in  the  composition  of 
the  council  was  largely  counted  upon  for  improving 
the  financial  management. 

Once  more  were  the  expectations  of  the  city 
reformers  cast  to  the  ground.  The  new  regula- 
tions had  but  little  salutary  effect.  Only  one 
street  railway  franchise,  that  of  the  Ninth  Avenue 
Railway,  was  granted  up  to  i860,  at  which  date 
the  legislature  abrogated  the  right  of  the  council 
to  authorize  railways ;  ^  and  there  appears  to  have 
been  no  competition  at  the  auction  and  no  payment 
1  Laws,  i860,  Chap.  lo. 


THE    CHARTER  AMENDMENTS   OF  iSjj        75 

to  the  city.  Perhaps  the  influence  of  the  require- 
ment that  leases  of  ferries  and  docks  be  made  at 
auction  may  be  traced  in  the  increase  in  the  rev- 
enue from  the  former  from  $66,900  in  1853  to 
$105,459  in  1855,  and  from  the  latter,  from 
$125,361  to  $160,602.1  The  provision  regarding 
contracts,  it  was  charged  in  1857,  was  often  evaded 
by  splitting  up  jobs  into  parts  whose  value  would 
fall  below  $250.^  Though  the  looseness  in  the 
budget  never  became  quite  as  conspicuous  as  in 
1852,  additional  appropriations  continued  exten- 
sively for  several  years.  The  law  of  1853  cer- 
tainly brought  about  almost  no  improvement  in 
the  character  of  the  common  council  or  in  the 
economy  of  the  government.  The  large  appropri- 
ations of  1853,  $5,069,650,  had  caused  loud  com- 
plaint ;  yet  only  three  years  later  more  than  two 
millions  had  been  added  to  the  budget.  As  had 
indeed  been  recognized  by  the  reformers,  the 
chief  requisite  for  good  government  was  not 
better  forms  but  better  men ;  and  to  secure  these 
was  made  well-nigh  impossible,  not  only  by  the 
difficulty  under  any  circumstances  of  careful  dis- 
crimination in  the  selection  of  so  many  officers  by 
popular  vote,  but  more  especially  by  reason  of 
the  low  character  of  the  political  majority  in  the 
city. 

^  Comp.  Rep.,  1858,  p.  60. 

2  Report  of  Committee  on  Cities  and  Villages,  Assembly  Docu- 
ments, 1857,  No.  125,  p.  5. 


76      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

§  15.    Charter  Changes  of  1857,  etc. 

It  was  the  failure  of  all  these  proposed  reforms, 
together  with  the  growing  partisan  motive  to 
which  color  was  lent  by  the  peculiar  political 
circumstances  of  the  time,  that  finally  led  to  the 
inauguration  of  the  system  of  state  interference. 
Unfortunate  as  was  this  violation  of  home  rule, 
the  necessities  of  the  time  perhaps  partly  justified 
it,  and  the  better  elements  in  the  city  undoubtedly 
approved  it.  New  York  city  was  then  strongly 
inclined  to  a  pro-slavery  and  disloyal  position ;  the 
Democratic  party,  which  was  in  large  majority, 
represented  mainly  the  worst  elements  in  the  pop- 
ulation. The  outside  state,  on  the  other  hand, 
was  strongly  Republican  and  opposed  to  slavery. 
The  Democrats  in  the  city  were  using  the  public 
patronage,  the  control  of  election  machinery,  and 
every  other  influence,  legitimate  or  illegitimate, 
to  carry  the  state  elections ;  they  were  not  only 
misruling  the  metropolis  :  they  were  using  it  as  a 
tool  to  capture  the  state  government.  It  was  no 
wonder  that  the  Republicans,  and  the  better  classes 
in  the  city  generally,  desired  some  means  to  save 
the  people  from  the  sjooilers,  nor  that  the  Repub- 
lican majority  in  the  legislature  was  very  ready  to 
come  to  their  aid  by  transferring  the  administration 
as  far  as  possible  to  its  own  control.^ 

In  1856  the  legislature  for  the  first  time  amended 

1  See  Report  of  Committee  on  Cities  and  Villages,  Assembly 
Documents,  1857,  No.  125,  p.  2. 


CHARTER    CHANGES   OF  i8s7,   ETC.  J'] 

materially  the  tax  law  proposed  by  the  city.  In 
the  following  year,  chiefly  for  partisan  ends,  a 
general  charter  was  passed,^  combining  and  amend- 
ing all  earlier  laws  except  the  property  grants  of 
the  colonial  charters.  The  composition  of  the 
council  was  changed  with  a  view  to  giving  more 
representation  to  the  minority  party.  Aldermen 
were  to  be  chosen  no  longer  from  wards,  but  from 
districts  named  in  the  law,  and  doubtless  consider- 
ably gerrymandered;  while  six  councilmen  were 
to  be  elected  from  each  senatorial  district  on  gen- 
eral ticket,  without  provision,  however,  for  cumu- 
lation of  votes  or  any  other  mode  of  minority 
election.  The  custom  of  choosing  all  the  chief 
executive  officers  directly  by  the  people,  which 
had  been  bitterly  attacked,  not  only  as  little 
calculated  to  favor  discriminating  selection,  but 
also  as  making  the  departments  unduly  inde- 
pendent and  irresponsible,  was  done  away  ;  and 
all  of  the  department  heads  except  the  comptroller 
and  city  counsel  were  made  appointive  by  the 
mayor,  with  the  confirmation  of  the  aldermen. 
The  term  of  the  comptroller  was  extended  to  four 
years  with  a  view  to  making  him  more  familiar 
with  the  finances.  Detailed  regulations  to  prevent 
evasion  of  the  law  regarding  municipal  contracts 
were  the  only  new  provisions  of  a  distinctly  finan- 
cial character. 

Another  measure  passed  in  1857^  sought  even 

1  Laws,  1857,  Chap.  446.  2  /^,(^_^  ,3^7^  Chap.  590. 


78      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

more  openly  than  the  charter  to  give  power  to  the 
minority  party  in  the  city.  This  was  the  separa- 
tion of  the  city  and  county  governments  and  the 
creation  of  a  board  of  supervisors  —  an  absolutely 
unnecessary  division  of  authority  from  any  stand- 
point except  that  of  party  expediency.  The  de- 
vice by  which  minority  representation  was  secured 
is  peculiar.  There  were  to  be  twelve  supervisors 
elected,  and  each  voter  might  put  six  names  upon 
his  ballot ;  the  six  persons  receiving  the  highest 
number  of  votes  were  to  be  declared  elected,  and 
afterwards  "  the  mayor  of  the  city  shall  appoint  as 
supervisors  the  six  persons  receiving  severally  "  the 
next  highest  number  of  votes. ^ 

But  this  was  not  all.  The  Republicans  began  at 
the  same  time  the  policy,  so  bitterly  detested  by 
the  political  majority  in  the  city,  of  placing  some 
of  the  most  important  local  departments  under  the 
control  of  legislative  commissions.  The  Central 
Park^  and  the  police'^  departments  were  the  first 
to  be  so  usurped.  The  park  had  already  been 
laid  out  under  a  law  of  1853,  but  its  improvement 
had  only  just  begun.  Eleven  commissioners, 
named  by  the  legislature  itself,  were  now  given 
exclusive  power  over  it ;  they  could  require  the 
city  even  to  issue  bonds  in  such  amounts  as  they 
saw  fit,  subject  only  to  limitations  set  by  the  act. 

1  The  method  of  election  was  somewhat  changed  in  1858  (Chap, 
321),  but  the  practical  working  remained  the  same. 

-  Laws,  1857,  Chap.  771.  ^  Ibid.^  Chap.  569. 


CHARTER    CHANGES   OF  18^7,  ETC.  79 

State  control  of  the  police  department  was  deemed 
specially  desirable  because  of  the  real  danger  from 
disloyal  disturbances,  as  well  as  of  the  important 
influence  exerted  by  the  police  in  elections.  To 
effect  this  purpose  within  constitutional  bounds 
the  legislature  employed  the  device,  also  made  use 
of  in  other  parts  of  the  state,  of  forming  a  'dis- 
trict '  by  the  combination  of  separate  jurisdictions. 
The  counties  of  New  York,  Kings,  Westchester, 
and  Richmond  were  united  into  the  *  Metropolitan 
police  district,'  under  the  management  of  a  board 
consisting  of  the  mayors  of  New  York  and  Brook- 
lyn, and  five  commissioners  appointed  by  the 
governor.  Three  years  later  ^  direct  local  influence 
in  the  board  was  withdrawn  entirely,  its  member- 
ship being  reduced  to  three  commissioners  chosen 
by  the  governor.  It  was  eight  years  later  before 
the  system  of  legislative  commissions  received 
further  extension.  Then  the  '  Metropolitan  fire 
department'^  and  the  'Metropolitan  board  of 
health'^  were  established.  These  departments 
comprised  only  New  York  and  Brooklyn,  but  had 
much  the  same  character  and  powers  as  the  police 
board. 

A  strong  attempt,  led  by  the  Democrats,  was 
made  in  the  constitutional  convention  of  1867  to 
abolish  all  these  legislative  commissions,  but  the 
convention    rejected   the    proposed   amendments ; 

^  Laws,  i860,  Chap.  209.  ^  /i^ij^^  1865,  Chap.  249. 

^  IbiJ.,  1866,  Chap.  74. 


80      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

and,  in  fact,  there  was  no  change  in  the  system 
till  the  charter  of  1870  summarily  ended  it. 

Numerous  other  instances  of  interference  with 
city  affairs  by  the  Republican  legislature  might  be 
cited.  In  1860^  the  commissioners  of  the  reorgan- 
ized department  of  charities  and  correction  were 
made  appointive  by  the  city  comptroller,  the  ex- 
planation of  this  singular  arrangement  being 
merely  that  the  comptroller  was  then  a  Republican, 
while  the  mayor  was  a  Democrat.  Again,  when, 
in  1 86 1,  through  a  division  in  the  Democratic  party, 
George  Opdyke,  a  Republican,  had  been  chosen 
mayor,  a  law  was  passed  making  the  term  of  all 
heads  of  departments  four  instead  of  two  years, 
and  the  change  applied  to  the  appointees  whom 
he  had  placed  in  office.^  Another  act  created  a 
commission,^  named  by  the  legislature,  to  revise 
the  city  charter ;  but,  probably  because  of  the 
general  absorption  in  war  affairs,  no  interest  in 
its  work  could  be  obtained,  and  it  finally  adjourned 
without  submitting  any  propositions. 

§  16.  The  Budget  and  the  Independent  Depart- 
ments. 

Having  sketched  the  political  conditions  of  this 
period  and  the  consequent  changes  in  the  general 
character  of  the  city  government,  we  must  retrace 
our  steps  to  consider  more  fully  the  municipal 
finances  and  the  effect  of  these  same  conditions 
upon  them. 

1  Laws,  i860,  Chap.  510.  2  //,/,/^  1863,  Chap.  68. 

'^  lind.,  1861,  Chap.  268. 


THE   INDEPENDENT  DEPARTMENTS  8 1 

Formally,  the  procedure  for  the  regulation  of 
city  expenditures  remained  nearly  the  same  from 
1850  to  1869  as  in  the  preceding  period.  The 
council  now  took  office  January  i,  so  that  the  com- 
plications due  to  the  change  of  administration  in 
the  middle  of  the  year  disappear.  Occasionally 
the  outgoing  council  voted  the  budget  in  Decem- 
ber, but  more  usually  the  new  council  passed  upon 
it  in  the  beginning  of  the  year.  The  actual  spirit 
and  working  of  the  appropriation  system,  however, 
was  almost  completely  changed  by  the  reorganiza- 
tion of  the  municipal  government,  by  the  establish- 
ment of  departments  independent  of  the  council, 
and  by  the  direct  interference  of  the  legislature  in 
the  budget. 

The  first  city  departments  to  be  removed  from 
the  financial  control  of  the  council  were  not  the 
legislative  commissions  just  described.  Almost 
from  the  beginning  of  the  system  of  free  public 
schools,  the  department  of  education  both  in  New 
York  city  and  elsewhere  has  been  very  largely 
independent  of  the  general  local  administration, 
and  more  directly  under  state  supervision.  As 
early  as  1844^  the  council  in  New  York  ceased  to 
have  any  control  over  the  expenditure  for  schools ; 
the  city  was  required  by  law  to  raise  a  definite  tax 
for  maintaining  the  system,  and  in  addition  such  a 
sum  for  new  buildings  as  the  board  of  education 
should  determine.     Similarly,  in  1849,^  the  '  alms- 

1  Laws,  1844,  Chap.  320.  -  Ibid.,  1849,  Chap.  246. 


82      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

house  department,'  which  governed  all  charitable 
and  correctional  institutions,  was  empowered  to  de- 
termine the  amount  of  taxes  that  should  be  raised 
for  its  support.  This  department  was  then  under 
the  control  of  ten  '  governors '  elected  directly  by 
the  people,  on  a  system  of  minority  representation. 
The  independence  of  these  two  departments 
does  not  appear  to  have  engendered  extravagance. 
Though  the  expenditures  for  schools  increased 
very  rapidly,  owing  to  the  comparative  newness  of 
the  system,  there  was  still  general  satisfaction  with 
the  work  of  the  board  of  education.^  The  expenses 
of  the  almshouse  department  actually  decreased 
under  the  law  of  1849.^  Nevertheless,  it  was  felt 
that  too  much  freedom  was  granted  to  these 
branches  of  the  government;  and  the  act  of  1853, 
while  it  refused  to  increase  the  power  of  the  dis- 
trusted common  council,  provided  that  the  annual 
appropriations  for  schools  and  for  charities  and 
correction  should  be  submitted  to  a  commission 
consisting  of  the  mayor,  comptroller,  recorder,  and 
the  presidents  of  the  aldermen  and  councilmen.^ 
This  body,  however,  had  only  advisory  power,  for 
the  departments  themselves  could  override  its 
action  by  two-thirds  vote.  If  the  expectation  was 
to  keep  down  expenditures  by  this  supervision,  it 
was  certainly  disappointed.    The  appropriations  for 

1  See  Comp.  Rep.,  1851,  p.  14  ;  1852,  p.  17;  1853,  p.  14. 

2  ^399,787  in  1848,  ^385,000  in  1853.  Ibid.,  1848,  p.  25;  1853, 
p.  37.  3  Laws,  1853,  Chap.  217. 


THE   INDEPENDENT  DEPARTMENTS  83 

the  city  schools,  which  had  been  about  $600,000 
in  1853,  were  multiplied  fivefold  in  1869.^  The 
almshouse  appropriations  likewise  took  at  first 
a  sudden  upward  leap,  but  under  the  law  of  i860, 
which  gave  the  appointment  of  the  heads  of  the 
department  to  the  comptroller,  it  appears  to  have 
been  economically  administered,^  and  the  board 
was  generally  commended  for  its  work. 

The  expenditures  of  the  *  legislative  commis- 
sions '  were  even  less  subject  to  local  control. 
The  financial  management  of  the  Metropolitan 
police  district  was  considerably  divided  among 
different  authorities.^  The  salaries  of  officers  and 
men,  and  largely,  too,  their  number,  were  fixed 
by  the  legislative  act.  The  amounts  needed  for 
miscellaneous  expenses,  which  were  but  small  as 
compared  with  the  pay  of  the  force,  were  esti- 
mated by  a  commission  consisting  of  the  police 
board  itself  and  the  comptrollers  of  New  York 
and  Brooklyn ;  they  were  then  submitted  to  an 
advisory  board  composed  of  the  presidents  of  the 
boards  of  supervisors  of  the  counties  of  New  York, 
Kings,  Westchester,  and  Richmond,  and  the  presi- 
dent of  the  board  of  aldermen  of  Brooklyn,  with 

^  These  and  the  following  figures  from  Comp.  Rep.,  1858,  p.  76; 
i860,  p.  82  ;  Manual,  1870,  p.  717.  The  various  sums  must  of 
course  be  considered  in  comparison  with  the  increase  in  the  general 
budget  and  in  other  departments,  remembering  the  inflation  of  the 
currency  from  1864  to  1869. 

2  Appropriations,  1856, $925,000;  i860, $639,150;  1869, $953,000. 

'  Laws,  i860,  Chap.  259,  §  11. 


84      PERIOD    OF  LEGISLATIVE   LNTERFRRENCE 

three  representatives  of  the  smaller  villages ;  but 
the  final  decision  rested  with  the  first  commission.^ 
The  disordered  condition  of  the  times  required 
a  very  large  police  force,  and  the  expenditure  in- 
creased rapidly.  From  1850  to  1854,  under  direct 
city  control,  the  police  appropriations  had  nearly 
doubled,  but  during  the  following  three  years  there 
had  been  actual  decrease.  It  was  accordingly 
easy  for  the  opponents  of  the  new  system  of  state 
control  to  complain  when  the  outlay  rose  from 
$825,500  in  1857  to  $1,355,175  in  i860,  and  to 
$2,638,291  in  1869.  Part  of  the  increase  in  the 
later  years,  however,  was  due  to  the  inflation  of 
the  currency  ;  and  the  general  opinion  of  the  time, 
even  among  the  more  candid  opponents  of  the 
legislative  commissions,  did  not  charge  the  depart- 
ment with  special  corruption  or  extravagance. 

The  current  expenditures  of  the  Central  Park 
commission,  to  be  met  from  taxes,  were  of  less 
importance  than  those  for  permanent  improve- 
ments, payable  from  bonds.  As  to  both  forms  of 
expenditure,  the  only  restrictions  upon  the  com- 
mission were  those  set  by  the  legislature  itself.^ 
Concerning  this  department,  likewise,  we  find  few 
complaints  of  mismanagement  or  extravagance. 
The  control  of  the  appropriations  of  the  Metropoli- 
tan fire  and  health  departments  was  quite  similar  to 

1  Under   the   law   of   i860,  §  60.     Under  the  original  law  this 
larger  board  had  the  final  appropriating  power. 
■■^  Laws,  1857,  Chap.  771;    i860,  Chap.  85. 


THE   INDEPENDENT  DEPARTMENTS  85 

that  of  the  police  appropriations.  The  institution, 
by  the  new  law  of  1865,  of  a  paid  fire  department, 
instead  of  the  inefficient  volunteer  companies,  nat- 
urally necessitated  large  added  expenditure.  The 
cost  of  fire  machines  and  apparatus,  buildings,  etc., 
in  1864,  had  been  $140,000;  the  appropriations  for 
the  new  service  by  1869  reached  $907,940.^ 

On  account  of  its  bi-partisan  composition,  the 
board  of  supervisors  was  often  classed  by  the 
enemies  of  the  system  with  the  hated  '  radical ' 
legislative  commissions.  Over  the  purely  county 
expenditures  this  board  had  budgetary  power  pre- 
cisely similar  to  that  of  the  council  in  the  city,  and 
equally  subject  to  control  by  the  state  government. 
The  extent  of  its  discretion  was,  however,  com- 
paratively small  at  first.  With  county  appropria- 
tions were  grouped  the  immense  sums  for  state 
taxes  and  police,  over  which  the  supervisors  had 
no  real  authority.  These  items,  together  with 
the  fixed  salaries  of  the  judiciary  —  a  rapidly  in- 
creasing factor  —  and  the  large  payments  on  the 
county  war  debt  which  soon  began,  swelled  the 
county  budget  so  that  it  nearly  equalled  that  of 
the  city.  But  while  the  total  county  appropria- 
tions for  1864  were  $6,204,037,  the  part  of  these 
classed  as  'for  the  support  of  the  county  govern- 
ment '  was  only  $839,844,^  while  a  large  propor- 
tion of  this  amount  was  practically  fixed  in  advance 

^  Comp.  Rep.,  1864,  p.  68;    Manual,  1870,  p.  717. 
2  Conip.  (county)  Rep.,  1864,  p.  14. 


86      PERIOD    OF  LEGISLATIVE  LNTERFERENCE 

by  law.  But  there  were  already  developing  within 
the  board  of  supervisors  the  germs  of  enormous 
corruption.  As  early  as  1861,  William  M.  Tweed, 
the  future  prince  of  '  bosses,'  had  commenced  the 
formation  of  the  *  supervisors'  ring ' ;  and  about 
the  close  of  the  war,  county  expenditures  for 
armories  and  drill  rooms,  for  printing,  '  lighting 
and  cleaning,  and  supplies,'  and  other  purposes, 
began  to  be  exploited  very  extensively.  Appro- 
priations '  for  the  support  of  the  county  govern- 
ment'  reached  $3,609,075  in  1869,^  an  increase  of 
nearly  450  per  cent  in  iive  years.  The  device 
of  the  Republicans  to  secure,  through  the  super- 
visors, control  of  part  of  the  local  government, 
had  proved  an  expensive  luxury.  But  the  further 
discussion  of  this  subject  belongs  to  the  history  of 
the  Tweed  Ring. 

After  this  review  of  the  financial  position  of  the 
independent  departments,  the  repeated  and  bitter 
complaints  of  the  members  of  the  Democratic  city 
council  concerning  this  subtraction  from  their  au- 
thority may  be  understood.  In  their  rancor,  how- 
ever, they  were  wont  to  be  hardly  fair  in  their 
comparisons,  and  to  class  the  board  of  education, 
the  department  of  charities  and  correction,  the 
commission  on  street  cleaning,  and  even  the  super- 
visors, under  the  title  of  'radical  commissions.' 
It  would  not  be  worth  while  to  follow  the  arith- 
metical contortions  by  which  the  finance  committee 

1  Comp.  (county)  Rep.,  1870,  p.  7. 


THE  INDEPENDENT  DEPARTMENTS 


87 


of  the  aldermen  in  1868  sought  to  make  it  ai)pear 
that  of  the  $23,293,564  estimated  for  the  city  and 
county  budgets,  the  '  total  for  the  state '  was 
$15,026,988,  for  the  county  $3,263,758,  and  for  the 
city  $5,002,818,  of  which  latter  sum  it  was  declared 
that  "  the  entire  amount  of  taxation  which  can  be 
chargeable  to  the  present  common  council"  was 
$1,710,709.^  A  more  correct  grouping  of  these 
figures  is  as  follows  :  — 

Estimated  Appropriations,  1868 


State  taxes   

City  departments  not  appointed  by  the  state 
government    but    independent    of    the    city 
council,  viz.  : 

$5,564,426 

Board  of  education      ....    $2,900,000 
Charities  and  correction      .     .         960,000 
Street  cleaning  contract .     .     .         504,696 

4.364,696 

Commissions  appointed  by  the  state,  viz. : 

Metropolitan  police     ....    $2,861,871 
Metropolitan  fire  department  .         893,000 
Metropolitan  board  of  health   .         177,588 
Central  Park  commission     .     .         219,060 

4.151.519 

College  of  New  York  and  asylums,  required 
County  expenditures,  including  interest    .     .     . 
Interest  and  redemption  of  city  debt    .     .     .     . 
Expenditures  under  direct  control  of  council     . 

390,797 
3-263.758 
1,847.11 1 
3.710,709 

Total 

$23,293,0162 

1  Proceedings  of  the  Aldermen,  vol.  109,  pp.  1 14-1 16.  It  must  be 
remembered  that  these  are  estimates,  not  the  final  appropriations. 
The  council  subtracted  the  $2,000,000  of  the  general  fund  to  arrive 
at  the  result  indicated. 

2  The  slight  discrepancy  is  due  to  typographical  errors  in  the 
original  figures. 


88      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

Even  this  classification,  however,  shows  the  com- 
paratively small  field  left  to  the  council  in  appro- 
priating the  city  moneys,  and,  as  we  shall  now  see, 
even  here  its  action  had  practically  no  weight, 
being  subject  to  continual  change  by  the  state 
legislature. 

§  17.    Legislative  Interference  in  the  Budget. 

Up  to  the  middle  of  the  century,  the  yearly  tax 
laws  had  been  almost  purely  formal ;  changes  were 
seldom  if  ever  made  in  the  sums  requested  by 
the  city,  and  the  laws  did  not  fix  specific  appropria- 
tions. But,  as  might  be  anticipated,  now  that  in- 
terference in  general  municipal  affairs  had  begun, 
the  legislature  soon  seized  the  opportunity  which 
the  tax  law  system  made  ready  to  its  grasp.  By  the 
most  flagrant  violation  of  the  home  rule  principle 
which  the  state  has  ever  witnessed,  the  ordinary  ex- 
penditures of  the  metropolis  came  to  be  minutely 
regulated  by  the  legislature. 

The  first  law  which  practically  incorporated  in 
itself  the  city  budget,  by  fixing  in  detail  the  items 
for  which  the  tax  should  be  levied,  was  that  of 
1851.^  No  change,  however,  was  made  by  the  leg- 
islature in  the  sums  determined  by  the  city  authori- 
ties. In  1853,^  and  regularly  thereafter,  a  section 
was  added  to  the  tax  law  providing  that  no  portion 
of  the  respective  amounts  should  be  applied  to  any 
other  object  than  that  specified,  thus  preventing 
transfers    of    appropriations.      Curiously    enough, 

1  Laws,  1 85 1,  Chap.  258.  "^  Ibid.,  1853,  Chap.  232. 


INTERFERENCE  IN   THE   BUDGET  89 

there  was  still  no  definite  prohibition  of  appropri- 
ations in  excess  of  the  sums  authorized,  and  the 
practice  of  making  additional  appropriations  con- 
tinued up  to  1856.^  We  have  already  noticed  the 
flagrant  case  of  1852.^  The  charter  amendments 
of  1853  did  not  avail  to  check  the  evil.  For  1854 
in  II  of  the  50  heads  of  account,  the  appropria- 
tions made  by  the  council  exceeded  the  limit  set 
by  the  tax  law,  the  amount  of  these  additions  be- 
ing equal  to  no  less  than  13  per  cent  of  the  levy. 
The  deficiency  for  the  year  that  had  to  be  met  by 
taxes  in  1855  was  ;$48i,6i2.  No  new  provision 
of  law  to  prevent  additional  appropriations  was 
adopted  till  i860,  but,  perhaps  from  the  influence 
of  public  sentiment,  they  practically  ceased  in 
1856. 

It  was  in  this  latter  year  that  the  legislature 
first  made  modifications  in  the  tax  law  submitted 
by  the  city  council.  The  assembly  committee  on 
cities  took  testimony  of  several  witnesses,  and 
changes,  chiefly  reductions,  were  made  in  10 
items,  the  total  for  general  purposes  being  thus 
decreased  from  ^3,485,944  to  $3,247, 189.^  From 
this  time  on,  such  amendments  to  the  tax  levies 

1  Compare  items  in  taljlc  of  taxes  levied  yearly  in  Comp.  Rep., 
1856,  p.  40,  with  the  tables  of  appropriations  in  the  separate  annual 
reports. 

2  Ante,  p.  72. 

3  Documents  of  the  Assembly,  1856,  No.  193;  Proceedings  of 
the  Council  approved  by  the  Mayor,  vol.  24,  p.  19;  Laws,  1856, 
Chap.  176. 


90      PERIOD    OF  LEGISLATIVE   INTERFEREXCE 

occur  yearly,  and  ever  in  greater  degree.  More- 
over, the  legislature,  now  finding  that  the  city 
fathers  were  disposed  to  use  as  extensively  and  as 
corruptly  as  possible  what  little  authority  remained 
to  them,  kept  tightening  the  reins  of  financial 
procedure.  The  Republican  city  comptroller,  Mr. 
Haws,  in  1859  began  the  practice  of  carrying  on 
unexpended  balances  of  appropriations  to  the 
same  purposes  in  the  following  year,  charging 
that  the  custom  of  allowing  them  to  lapse  was 
illegal  and  calculated  to  favor  mismanagement. 
This  change  was  made  mandatory  by  a  law  of 
i86o;i  but  at  the  same  time  the  council  was 
allowed  to  transfer  moneys  from  specific  appro- 
priations that  were  more  than  sufificient,  to  meet 
deficiencies  in  others.  This  permission  proved  a 
dangerous  loophole  for  the  assaults  of  the  common 
council  on  the  treasury.  Sums  known  to  be  more 
than  required  were  sometimes  appropriated  for 
proper  purposes,  and  it  was  regularly  to  the  more 
questionable  objects  that  balances  were  transferred. 
Thus,  in  1863,  transfers  in  the  city  budget  were 
made  from  16  items,  involving  an  amount  of 
^279,935  out  of  a  total  appropriation  of  ;^7,374,86i.2 
Most  of  this  sum  went  to  cleaning  streets,  a  noto- 
riously mismanaged  department,   to  '  advertising,' 

1  Laws,  i860,  Chap.  509. 

-  Manual,  1864,  pp.  168-173.  See,  also,  concerning  this  general 
subject,  An  Appeal  by  the  Citizens'  Association  of  New  York  against 
the  Abuses  in  the  Local  Government,  New  York,  1866,  p.  20. 


INTERFERENCE  IN   THE  BUDGET  9 1 

and  to  'city  contingencies,'  the  transfers  to  these 
three  heads  amounting  to  more  than  half  as  much 
as  the  original  appropriations  for  them. 

In  view  of  the  abuse  of  1863,  the  legislature  in 
the  next  year  forbade  transfers,  and  enacted  an 
apparently  iron-clad  section  intended  to  make  the 
figures  of  the  tax  law  absolutely  unchangeable. 
But  another  device  for  evasion  was  ready  to  hand. 
Since  1859  the  tax  laws  had  yearly  authorized  the 
levy  of  additional  taxes  to  pay  any  judgments  re- 
covered against  the  city  after  their  passage. 
Under  this  provision  large  contracts  were  made 
in  1864  and  1865  with  the  express  understanding 
that  the  city  would  confess  judgment  without  de- 
fence for  the  amount  due.  The  greater  part  of 
these  expenditures,  moreover,  were  for  the  same 
questionable  purposes  to  which  transfers  had  been 
chiefly  made.  In  1864  the  total  amount  spent  on 
city  account  for  advertising,  printing,  and  station- 
ery was  $522,066,  of  which  no  less  than  $311,578 
was  paid  on  judgments.^  In  this  same  year  the 
entire  expense  of  street  cleaning  was  collected  by 
suit.  The  legislature  had  authorized  the  levy  of 
$300,000  for  cleaning  the  streets,  but  a  bid  to  do  the 
work  for  that  sum  was  rejected,  no  appropriation 

1  Report  of  the  Comptroller  of  New  York  in  reply  to  a  resolu- 
tion, New  York  Senate  Documents,  1867,  No.  66,  pp.  53,  63,  71. 
Compare  Comp.  Rep.,  1864,  pp.  68,  207.  .See,  also,  concerning  the 
evil  in  general,  the  above-cited  pamphlet  of  the  Citizens'  Associa- 
tion, p.  20. 


92      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

whatever  was  made,  and  the  streets  were  cleaned 
throughout  the  year  by  days'  work.  The  laborers 
assigned  their  claims  to  bankers,  who  collected 
from  the  city  on  judgments  $758,772  during  the 
year.  In  both  these  instances  the  limit  that  the 
legislature  had  fixed  on  expenditure  was  exceeded 
fully  150  per  cent  by  this  simple  device.^  Once 
more  rallying  to  the  contest,  the  legislature,  in  the 
tax  laws  beginning  with  1866,^  forbade  the  pay- 
ment of  any  judgment  for  a  debt  beyond  the 
amount  of  the  appropriation  under  which  it  prop- 
erly belonged.  This  provision,  however,  was 
largely  disobeyed.  In  fact,  the  Ring  was  now 
rising  into  power  both  in  the  city  and  in  the  legis- 
lature, and  legal  restrictions  of  all  sorts  were  soon 
utterly  disregarded. 

The  evident  disposition  to  loose  financial  man- 
agement, thus  manifested  on  the  part  of  the  local 
authorities,  constituted  at  least  some  justification 
for  the  growing  tendency  of  the  state  legislature  to 
modify  extensively  the  annual  tax  levies.  During 
the  '6o's  this  interference  became  so  great  that 
practically  the  entire  appropriating  power  was 
usurped,  as  may  be  seen  by  the  following  table 
showing  the  appropriations  on  city  account  from 
i860  to  1869,  as  originally  made  by  the   council 

1  Proceedings  of  .Select  Committee  on  Street  Cleaning  Frauds, 
New  York  Senate  Documents,  1865,  No.  38.     See  especially  pp.  92, 

531,  592. 

2  Laws,  1866,  Chap.  876,  §  10. 


INTERFERENCE  IN   THE  BUDGET 


93 


and  as  they  stood  at  the  end  of  the  year  after  the 
legislature  had  acted  upon  them  :  ^  — 

Appropriations  on  City  Account 


Original 

Final 

i860 

$5,928,292 

$6,571,965 

I86I 

7,412.967 

6,837,315 

1862 

5,681,267 

6,248,164 

1863 

7753-065 

7.374.861 

1864 

7795' 1 04 

8.671,664 

1865 

9,256.498 

11,297,618 

1866 

10,216.993 

10.593,148 

1867 

II. 105.875 

12,599,359 

1868 

11,329,393 

13,173,046 

The  extensive  additions,  on  the  one  hand,  thus 
regularly  made  by  the  state  laws,^  were  often,  per- 
haps usually,  for  really  necessary  purposes  which 
the  local  authorities,  by  neglect  or  for  partisan 
reasons,  had  omitted  from  the  budgets.  The  city 
magistrates  were  specially  prone  to  refuse  appro- 
priations asked  by  the  various  independent  depart- 
ments, or  required  for  special  enterprises  under 
legislative  acts.  As  the  council  often  neglected 
to  vote  such  items,  even  after  their  inclusion   in 

1  The  comptroller's  reports  give  yearly  the  dates  of  the  various 
appropriations  made  during  the  year  so  that  these  can  be  distin- 
guished. 

^  The  deductions  in  1861  and  1863  were  due  to  quite  exceptional 
causes. 


94      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

the  tax  law,  it  became  the  custom  to  authorize 
and  direct  the  mayor  and  comptroller  in  such  case 
to  make  the  appropriation.^  On  the  other  hand, 
the  legislature,  while  so  largely  increasing  the 
gross  budget,  quite  uniformly  cut  down  the  items 
already  voted  by  the  council.  How  powerfully 
this  general  readjustment  affected  the  budget  may 
be  perceived  from  the  appropriations  of  1867,^ 
the  changes  on  May  1 1  and  the  amount  added 
by  the  mayor  and  comptroller  being  due  mainly 
to  the  effect  of  the  tax  law :  — 

Amount  appropriated  by  ordinance,  March  15  .  $11,105,875 
Less  reduced  by  ordinance,  May  11....  592,500 

$10,513,375 

Added  by  ordinance.  May  II 1,180,767 

Added  by  mayor  and  comptroller 905,217 

Final  appropriation $12,599,359 

The  legislature  added  14  items,  increased  13,  re- 
duced 14,  and  struck  out  i,^  these  constituting 
altogether  a  very  large  proportion  of  the  entire 
number  of  items.  It  is  hardly  remarkable,  in 
view  of  such  circumstances,  that  in  two  years* 
the  city  council  seemed  to  accept  the  futility  of 
its  own  action,  and  made  only  partial  appropria- 
tions till  after  the  tax  law  was  adopted. 

1  Laws,  1864,  Chap.  405,  §  6. 

2  Comp.  Rep.,  1867,  p.  13. 

^  Report  of  the  Finance  Committee  of  the  Aldermen,  Proceed- 
ings of  the  Aldermen,  vol.  109,  p.  107. 

^  1864,  Comp.  Rep.,  p.  12  ;   1866,  ibid.,  p.  12. 


INTERFERENCE  IN   THE  BUDGET  95 

The  Citizens'  Association,  an  organization  of 
certain  friends  of  good  government,  mostly  Re- 
publicans, of  which  Peter  Cooper  was  president, 
was  active  at  Albany  during  the  years  following 
the  war  in  securing  changes  in  the  tax  laws.^  It 
boasts  of  having  brought  about  very  great  saving, 
through  obtaining  reductions  in  items  approved  by 
the  council,  and  still  more  through  defeating  at- 
tempts frequently  made  by  city  officers  to  h'ave  their 
appropriations  increased  in  ways  contemplated  not 
even  by  the  council.  The  most  flagrant  instance 
of  such  action  of  the  executive  departments  oc- 
curred in  1869.2  The  proposed  levy  had  been 
considerably  cut  down  in  the  bill  recommended 
by  the  senate  and  assembly  committees ;  but  Mayor 
Hall,  with  a  number  of  other  city  officials,  went  to 
Albany,  and  by  their  effective  lobbying  brought  it 
about  that,  when  the  bill  came  up  for  final  passage, 
a  substitute,  vastly  increasing  the  appropriations, 
was  suddenly  sprung  upon  the  assembly  and 
rushed  through  without  reading.  The  senate  re- 
fused to  concur,  and  only  after  two  conferences 
had  been  held  was  a  bill  passed,  in  the  very  last 
hour  of  the  session,  which,  though  greatly  reduc- 
ing the  sums  named    in    the   substitute   bill,   still 

1  See  the  annual  reports  and  various  other  pamphlets  published 
by  the  association,  1864  to  1874,  collected  in  one  volume  by  the 
association.     The  statements  made  are  not  always  trustworthy. 

2  Pamphlet  of  the  association,  reprinted  from  Neiu  York  Times, 
June  4,  1869.  , 


96      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

made  considerable  increase  over  the  comptroller's 
estimates.^ 

This  narrative  is  further  interesting  as  showing 
the  way  in  which  the  city  tax  laws,  involving  such 
immense  sums  of  money,  were  regularly  'jammed' 
through,  with  no  opportunity  for  proper  consid- 
eration. It  need  not  be  said  that  in  the  last  two 
or  three  years  of  the  decade,  when  the  legislature 
was  becoming  exceedingly  corrupt,  and  when 
Tweed  was  already  gaining  wide  control  over  it, 
the  passage  of  the  annual  levy  was  the  occasion 
of  no  small  amount  of  bribery  and  corruption. 
The  budget  system  of  New  York  city,  if  system 
such  a  monstrosity  could  be  called,  was  fast  making 
ready  for  the  gigantic  frauds  of  1869  to  1871. 

If   other   illustration  were   needed  of  the  little 

1  The  association  gives  the  following  figures:  — 


Comptroller's 
Estimates 


Assembly 
Substitute 


Law  as 
Adopted 


City      . 
County 


^4,896,477 
1,442,845 


^7.167,363 
3.950,550 


?5,595.236 
2.550,550 


It  is  impossible  to  trace  out  from  official  records  just  how  these 
amounts  were  arrived  at,  as  they  include  sums  to  be  raised  by  bonds, 
and  are  otherwise  complicated.  Apparently  there  is  some  exag- 
geration, but  the  account  of  the  procedure  is  substantially  correct; 
and  the  substitute  levies  amounted  to  actually  fully  $600,000  more 
for  the  city  and  $300,000  more  for  the  county,  as  to  taxes  alone, 
than  those  in  the  law  as  passed.  See  Assembly  Journal,  1869,  pp. 
2053,  2108,  2147,  2161;    Laws,  1869,  Chaps.  875,  876. 


INTERFERENCE  IN   THE   BUDGET  97 

heed  paid  by  the  legislature  to  the  action  of  the 
local  authorities  in  fixing  the  local  expenditures, 
the  fact  might  be  cited  that  in  1867  it  was  enacted 
that  thereafter  the  estimates  should  be  prepared 
by  the  mayor  and  comptroller,  and  after  being 
presented  to  the  council  should  be  forwarded  to 
the  legislature  within  three  weeks,  whether  the 
council  had  voted  upon  them  or  not.^  A  marked 
change,  this,  from  the  days  when  the  annual  tax 
laws  had  been  intended  simply  to  place  the  seal 
of  state  authority  on  municipal  acts.  This  ten- 
dency to  increase  the  power  of  the  mayor  and 
comptroller  in  the  appropriations,  which  has  been 
noted  also  in  another  connection,  continued  till  the 
practice  merged,  under  the  charter  of  1870,  into 
the  new  system  of  control  by  the  board  of  estimate 
and  apportionment,  which  meant  at  first  control 
by  the  four  arch  conspirators  of  the  Tweed  Ring. 

In  the  tax  law  of  1867,  a  section  was  adopted 
requiring  a  three-fourths  vote  of  the  council  upon 
any  appropriation  or  expenditure,  only  a  majority 
having  been  necessary  before.  This  change,  which 
has  persisted  till  the  present  time,  was  designed 
to  give  added  restrictive  power  to  the  members  of 
the  Republican  minority  in  the  council ;  but  we  are 
told  that  a  few  of  these  were  thereupon  bought  uj) 
without  difficulty. 

§  18.    The  City  Debt. 

Although  the  beginning  of   1870  is  the  time  set 

1  Laws,  1867,  Chap.  586,  §  lo. 
H 


98       PERIOD    OF  LEGISLATIVE   INTERFERENCE 

for  the  close  of  the  period  now  under  considera- 
tion, because  that  was  the  date  of  the  Tweed 
charter,  the  Ring  rule  was  already  firmly  estab- 
lished during  1869,  and  most  of  the  great  addi- 
tions to  the  city  debt  in  that  year  properly  belong 
to  the  Ring  period.  A  just  summary  of  the  re- 
sults of  the  financial  management  for  the  two 
decades  will  consider  the  state  of  the  debt  at  the 
close  of  1868.  Even  up  to  that  time  there  had 
been  a  very  rapid  growth  in  the  burden  of  indebt- 
edness. Two  great  factors  had  contributed  to 
this  increase  —  the  opening  and  improvement  of 
Central  Park,  and  the  bounties  paid  to  soldiers 
during  the  Civil  War.  Several  smaller  bond  issues 
should,  however,  be  briefly  mentioned. 

There  was  issued  during  the  early  '50's  ^500,000 
more  of  '  public  building  stock '  for  various  build- 
ings, and  an  equal  amount  for  the  construction  of 
docks  and  slips,  for  which  the  increasing  annual 
outlay  from  regular  appropriations  had  become  a 
considerable  burden. ^  Improvements  of  the  water 
system  still  required  large  bond  issues,  though 
these  scarcely  aggregated  as  much  as  did  the  water 
stocks  redeemed  during  this  period.  The  construc- 
tion of  new  reservoirs  in  Central  Park,  begun  in 
1856,  was  the  most  extensive  of  these  enterprises,^ 
but  later  on  the  erection  of  the  high  service  water- 

1  Comp.  Rep.,  1855,  pp.  45,  47.     Payable  in  annual  instalments. 

2  Total  cost,  ^3,708,000.  Comp.  Rep.,  i860,  p.  46,  p.  98,  Table; 
Laws,  i860,  Chap.  372;    Manual,  1869,  p.  719. 


THE    CITY  DEBT  99 

works  at  Carmansville  for  supplying  the  upper 
part  of  the  city,  and  of  new  reservoirs  for  storage 
in  Putnam  county,  called  for  considerable  sums.^ 
The  aggregate  of  water  bonds  issued  from  1850  to 
1869  was  $5,420,800. 

The  pressing  need  for  a  large  park^  to  supple- 
ment the  few  small  squares  in  the  lower  part  of 
the  city  first  found  influential  expression  in  a 
special  message  of  Mayor  Kingsland  in  185 1. 
The  council,  declaring  that  "the  subject  has 
awakened  in  the  minds  of  our  fellow-citizens  an 
uncommon  interest,"  requested  the  legislature  to 
authorize  the  city  to  take  a  certain  piece  of  land, 
known  as  Jones'  Wood,  bordering  on  the  East  river. 
The  suggested  law  was  passed,  but  before  it  could 
be  put  into  execution  there  began  an  agitation  for 
a  larger  space.  A  committee  of  the  council  recom- 
mended the  site  of  the  present  Central  Park,  as 
being  both  much  larger,  and,  on  account  of  its 
very  rocky  and  uneven  character,  almost  worthless 
for  dwelling  or  business  purposes.  They  estimated 
that  from  this  latter  circumstance  the  cost  of  the 
land  would  be  but  $1,407,325.*  During  the  long 
process  of  assessing  the  value  of  the  lands  taken, 

•  Laws,  1863,  Chap.  95;  1865,  Chaps.  285,  581 ;  1867,  Chap.  251 ; 
Comp.  Rep.,  1864,  p.  92;   Manual,  1869,  p.  719. 

2  Sketch  based  on  documents  quoted  in  First  Annual  Report 
on  the  Improvement  of  the  Central  Park,  pp.  77  fif;  Documents  of 
the  Aldermen,  1857,  No.  5. 

^  Ibid.,  p.  155.  The  change  was  sanctioned  by  Chap.  616,  Laws 
of  1853. 


lOO      PERIOD    OF  LEGISLATIVE   INTERFERENCE 

however,  it  became  apparent  that  the  cost  would 
far  outrun  this  sum,  and  strong  pressure  was 
brought  to  bear  to  reduce  the  size  of  the  parlv. 
The  council  actually  passed  a  resolution  that  it  be 
terminated  on  the  south  at  72d  Street,  but  this 
was  vetoed  by  the  mayor.  The  final  assessment 
of  damages,  made  in  1856,  fixed  the  sum  at 
$5,073,443,  of  which  $1,658,395  was  charged  upon 
the  adjoining  property  for  the  benefit  thereto ; 
while  to  meet  the  remainder  (with  sundry  other 
expenses)  bonds  to  the  amount  of  $3,740,300  were 
issued.^  The  improvement  of  the  park  began  in 
1857  under  the  state  commission  heretofore  de- 
scribed, and  by  means  of  successive  bond  issues 
was  pushed  steadily  forward  during  all  the  next 
decade,  the  total  expenditure  on  the  debt  account, 
to  the  close  of  1868,  being  $5,435, 12 1.^  Bonds  to 
the  amount  of  a  million  were  also  issued  in  1861 
for  the  extension  of  the  park  from  io6th  to  iioth 
Street.  The  total  debt  for  the  park  January  i, 
1869,  was  $10,048,571.^ 

All  of  the  park  bonds  were  redeemable  from  the 
sinking  fund,  which  already  promised  to  be  more 
than  sufficient  for  the  purpose,  —  the  interest,  how- 
ever, not  being  payable  from  the  interest  sinking 
fund,  but  from  taxation.  It  is  difficult  to  under- 
stand the  reason  for  the  exception  regarding  the 

1  Comp.  Rep.,  1859,  p.  35. 

2  Thirteenth  Annual  Report  of  Commissioners  of  Central  Park, 
p.  79.  ^  Manual,  1869,  p.  720. 


THE    CITY  DEBT  lOI 

interest,  which  further  complicated  the  elaborate 
debt  system  ;  unless,  perhaps,  it  was  intended  ulti- 
mately to  abandon  the  interest  fund  altogether, 
which  would  indeed  have  been  a  rational  thing  to 
do  had  it  been  undertaken  entirely  and  at  once. 
The  arrangement  could  scarcely  be  designed  to 
protect  the  holders  of  earlier  stocks,  for  the  inter- 
est fund,  swollen  by  the  rapid  growth  of  the  water 
rents,  had  already  at  the  time  of  the  issue  of  the 
first  park  stocks  accumulated  a  surplus  of  consid- 
erable amount  ^ ;  so  that,  in  1859,  a  law,  the  first  of 
the  several  patches  on  the  sinking  fund  system,  was 
secured,  allowing  the  transfer  of  the  existing  and 
any  future  surplus  to  the  redemption  fund.'-^  This 
change  added  half  a  million  yearly  to  the  income 
of  the  redemption  fund,  and  within  three  years  it 
was  perceived  that  there  would  be  an  unnecessary 
accumulation  in  the  latter  fund.  Another  act, 
accordingly,  permitted  the  transfer  of  the  annual 
surplus  of  the  interest  fund  to  the  '  general  fund ' 
for  the  reduction  of  taxes,  an  arrangement  that 
lasted  till  1878.'^  When  it  is  remembered  that  all 
the  great  issues  of  bonds  after  i860,  aside  from 
those  for  water  and  parks,  were  made  payable 
principal    and    interest    from    taxation,   it  will    be 

^  The  annual  income  of  the  redemption  fund  had  risen  from 
$497,638  in  1850  to  $879,744  in  1858,  that  of  the  interest  fund  from 
^757.153  to  $1,159,388.     Comp.  Rep.,  1858,  pp.  45  ff. 

-  Laws,  1859,  Chap.  406;  Comp.  Rep.,  1858,  p.  13.  The  sur- 
plus was  then  $2,579,534.  '''  Laws,  1862,  Chap.  163. 


102      PERIOD    OF  LEGISLATIVE   INTERFERENCE 

understood  how  exceedingly  bungling  the  debt 
system  had  become.  The  simile  of  taking  money 
from  one  pocket  to  place  it  in  another  is  hardly 
adequate  to  characterize  it. 

Meantime,  in  i860,  just  as  had  been  the  case 
twenty  years  before,  careless  management  of  the 
budget  had  required  the  issue  of  bonds  ($  2,748,000) 
to  fund  deficiencies.^  The  shortage  was  due  per- 
haps less  to  the  additional  appropriations  of  the 
earlier  '50's  than  to  the  failure  to  collect  in  full  the 
amount  of  taxes  levied,  no  provision  existing  till 
1861  ^  for  adding  a  small  percentage  to  the  required 
amount  to  cover  the  loss  due  to  non-collection.  A 
large  amount  of  uncollectable  special  assessments 
contributed  to  the  deficiency.  In  this  same  year, 
too,  the  county  began  the  construction  of  its 
famous  court  house,  and  first  entered  the  field,  in 
which  it  was  destined  to  play  so  conspicuous  a 
part,  as  a  debt-creating  body.  By  1 869  $2,600,000 
had  been  borrowed  for  this  building.-^ 

The  immense  proportions  of  the  loans  made  for 
paying  war  bounties  were  partly  due  to  the  strong 
anti-Union  sentiment  of  large  classes  in  the  me- 
tropolis, partly  to  the  poverty  of  many  citizens. 
Probably  in  few  places  throughout  New  York  or 
other  states  was  there  so  great  per  capita  expendi- 
ture for  this  purpose.  From  the  very  beginning 
of  the  war  the  city  council  commenced  to  give  aid 

1  Comp.  Rep.,  i860,  pp.  35,  47,  48. 

-  Laws,  1861,  Chap.  240.  ^  Manual,  1869,  p.  722. 


THE    CITY  DEBT  IO3 

to  the  families  of  volunteers,  and  when  the  drafts 
began,  enormous  outlay  for  bounties  and  substitutes 
was  necessary  to  prevent  the  repetition  of  the 
terrible  riots  of  1863.  Toward  the  close  of  the 
war,  the  county  authorities  took  even  a  greater 
part  in  paying  bounties  than  the  city  authorities. 
There  was  considerable  discord  among  the  city 
fathers,  many  of  whom  showed  disloyal  tendencies ; 
and  it  was  doubtless  on  this  account  that  the  board 
of  supervisors,  half  of  whom  were  Republicans, 
took  the  matter  up.^  The  first  debt  created  by  that 
body  was  to  pay  for  damages  to  property  in  the 
riot  of  July,  1863,  but  immediately  thereafter  a 
committee  of  the  supervisors  was  authorized  to 
procure  substitutes  for  the  firemen,  policemen,  and 
state  militia-men  in  the  city,  and  also  at  discretion 
to  pay  bounties  or  procure  substitutes  for  other 
drafted  men.  These  county  bounties  were  some- 
times granted  in  addition  to  the  amount  paid  to  the 
same  persons  by  the  city,  the  usual  sum  allowed 
by  the  county  being  $300.  About  one-fourth  of 
the  recruits  furnished  by  New  York  city  during 
the  entire  war  were  recipients  of  bounties  from  one 
authority  or  the  other.^ 

Early  in  1865  the  legislature  passed  a  law  pro- 
viding that  the  state  should  refund  bounties  there- 

1  Proceedings  of  the  Supervisors,  1863,  vol.  2,  p.  213. 

"^  Proceedings  of  the  Supervisors,  1863,  vol.  2,  pp.  215,  624; 
Report  of  Special  Committee  on  Volunteering,  Documents  of  the 
Supervisors,  1864,  pp.  356,  359. 


I04      PERIOD    OF  LEGISLATIVE   INTERFERENCE 

after  paid  by  all  local  authorities,  but  the  great 
bulk  of  the  war  expenditures  of  New  York  city  had 
already  been  incurred.^  At  its  highest  point  the 
war  debt  of  the  metropolis  stood  at  $14,597,300  — 
considerably  more  than  the  original  cost  of  the 
Croton  aqueduct.^  Of  this  amount  the  county  had 
borrowed  about  two-thirds,  the  city  the  remainder. 
The  bond  issues  composing  this  debt  were  numer- 
ous and  complex.  Often  they  were  made  tempora- 
rily at  first,  in  anticipation  of  legislative  authority. 
Owing  to  these  circumstances  there  was  some  diffi- 
culty in  placing  loans  at  all ;  nevertheless  by  fixing 
interest  at  6  per  cent  the  city  succeeded  in  selling 
bonds  at  par  till  the  end,  although,  of  course,  the 
inflation  of  the  currency  really  constituted  a  depre- 
ciation in  the  price  of  stocks.  These  great  bond 
issues  were  all  made  payable  from  taxation,  chiefly 
in  equal  annual  instalments,  beginning  during  the 
war  itself  and  running  as  far  as  the  present  year, 
1897. 

One  other  enterprise  that  ultimately  added 
largely  to  the  permanent  debt  was  begun  in  this 
period.  The  county  authorities  undertook,  in  1865 
to  1869,  the  opening  and  improvement  of  the  great 
public  drive  in  the  upper  part  of  the  island,  now 
known  as  'The  Boulevard.'  Part  of  its  cost  was 
met  by  special  assessments,  but  nearly  an  equal  sum 

1  Laws,    1865,  Chap.    29.     New   York    county    received    about 
$2,500,000.     Comp.  Co.  Rep.,  1869,  p.  33. 
■■^  Manual,  1S69,  p.  722. 


THE    CITY  DEBT 


105 


was  paid  by  the  city  at  large.  ^  The  bonds  issued 
for  this  purpose  amounted  to  $851,700  up  to  1869.^ 
A  few  other  small  bond  issues  during  this  period, 
which  are  indicated  below,  need  scarcely  be  de- 
scribed in  detail.  The  following  is  a  summary  of 
the  issues  of  funded  debt  from  1850  to  1868  in- 
clusive :  — 

Debt  Issues,  1850-1868 


Debt  outstanding  January  i,  1850   . 

$15,241,783 

Lssued  to  January  i,  1869,  for — 

Water  supply 

%  5,420,800 

Central  Park 

10,048,571 

Real  estate  (West  Washington 

Market  and  Fort  Gansevoort 

property,  1 860-1 863)  .      .     . 

1,133437 

Public  buildings 

822,000 

Court-house 

2,600,000 

Improving  Boulevard      .     .     . 

851,700 

Floating  debt 

2,748,000 

War  purposes    (amount   Janu- 

ary I,  1869)^ 

13,593,600 

Refunding  taxes  on  U.  S.  bonds 

(amount  January  i,  1869)^    . 

1,364,800 

Docks 

500,000 

Miscellaneous 

229,000 

$39,311,908 

54,553,691 

Bonds  redeemed  1850- 1869.  except 

war  and  tax-refunding  bonds  . 

9,966,833 

Funded  debt,  January  I,  1869     .     . 

$44,586,858 

1  '^QQ  post,  p.  109-110.  2  Manual,  1869,  p.  722. 

^  The  complicated  refundings  of  the  war  bonds,  and  likewise  the 
amount  of  these,  and  of  the  bonds  for  refunding  taxes,  which  had 
been  paid  prior  to  1869,  have  been  disregarded.  These  annual 
payments  may  properly  be  considered  part  of  ordinary  current 
outlay. 


I06      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

About  one-third  of  the  $44,586,858  thus  outstand- 
ing was  county  debt.  Nearly  one-half  was  paya- 
ble from  taxation,  the  remainder  from  the  sink- 
ing fund,  which  already  amounted  to  $16,501,109. 
Besides  the  funded  debt,  $4,395,872  of  assess- 
ment bonds  were  now  outstanding,  and  $3,222,700 
of  revenue  bonds.  The  net  debt  of  all  classes 
was  thus  $35,704,321.1  The  gross  funded  debt 
had  increased  292  per  cent  between  1850  and 
1868,  the  net  debt  259  per  cent,  while  even  up  to 
1870  the  population  had  increased  only  193  per 
cent. 

It  must  have  been  evident  from  the  figures  of 
1868  that  the  sinking  fund  would  be  far  more  than 
sufficient  to  meet  the  part  of  the  debt  for  which  it 
was  pledged.  Already  it  was  equal  to  nearly  three- 
fourths  of  that  debt,  fully  two  millions  a  year  were 
being  added  to  it  from  the  revenues,  while  many  of 
the  bonds  to  which  it  was  applicable  would  not  fall 
due  for  over  twenty  years.  No  special  attempts 
had  been  made  to  increase  the  revenues  of  either 
the  interest  or  the  redemption  fund  during  the 
'6o's ;  but  the  natural  development  of  the  city 
caused  them  to  augment  in  a  greater  ratio  than 
had  been  anticipated.  While  the  interest  fund 
would  have  been  quite  inadequate  to  the  interest 
on  the  entire  debt,  the  redemption  fund  could 
without  prejudice  have  paid  all  the  bonds  that 
were   annually   maturing    after   the  war,    and    no 

1  Manual,  1869,  pp.  722  ff. 


ASSESSMENTS,    TAXES,  AND  ACCOUNTS      lO/ 

small  burden  would  have  been  removed  from  the 
taxpayers. 

§  19.    Special  Assessments,  Taxes,  and  Accounts. 

During  the  decade  from  1850  to  i860,  the  im- 
provement of  streets  by  special  assessments  was 
carried  on  to  a  relatively  very  great  extent,  the 
average  annual  outlay  to  be  met  in  this  way  being 
equal  to  fully  one-fourth  of  that  from  taxation. 
In  1855,  $2,378,817  was  spent  on  assessment  enter- 
prises, the  tax  levy  being  only  $5,843,822.^  In 
the  following  decade,  however,  up  to  and  includ- 
ing 1867,  the  assessment  expenditure  failed  decid- 
edly to  keep  pace  with  the  enormous  increase  in 
the  tax  budget ;  but  after  the  latter  year  the  om- 
nivorous Ring  seized  upon  this  system  as  a  means 
of  further  plunder,  and  swelled  the  assessment 
lists  to  a  vast  degree. 

Several  noteworthy  changes  were  introduced  in 
the  system  during  this  period.  Up  to  1852  it 
had  been  the  custom  to  require  the  contractors 
for  street  improvements  to  wait  for  their  pay 
until  the  collection  of  the  assessments,  and  a 
somewhat  similar  practice  was  in  vogue  regard- 
ing payments  for  land  taken  in  opening  streets. 
Contractors  thus  needed  to  possess  large  capital 
to  conduct  business,  and  this  fact  tended  to  con- 
centrate the  work  in  the  hands  of  a  few  firms, 
and  to  destroy  competition.'-^     To  remedy  this  evil 

1  Comp.  Rep.,  1855,  pp.  28,  in. 

'■^  For  description  of  the  system,  see  Comp.  Rep.,  1853,  p.  9. 


I08      PERIOD    OF  LEGISLATIVE  IiVTERFEREIVCE 

a  law^  was  secured  in  1852,  which  instituted  the 
practice  of  issuing  assessment  bonds  in  anticipa- 
tion of  the  collection  of  assessments,  from  the  pro- 
ceeds of  which  bonds  contractors  were  paid.  The 
term  of  these  bonds  in  practice  was  at  first  only 
from  one  to  three  years.  At  an  early  period  a 
distinction  was  established  between  '  assessment 
bonds '  for  street  openings  and  '  street  improve- 
ment bonds.' 

Under  the  new  arrangement  the  management  of 
the  system  for  some  years  continued  to  be,  even 
more  than  before,  loose  and  unmethodical,  and 
losses  from  uncollected  assessments  and  other 
causes  began  to  fall  on  the  city.  The  amount  of 
assessment  bonds  increased  steadily,  reaching 
$1,898,200  in  1860.2  When  Mr.  Haws  became 
comptroller  in  1859,  he  found  the  accounts  relating 
to  assessments  in  hopeless  confusion.  It  finally 
developed  that  there  was  a  deficiency  of  nearly  a 
million  in  the  assessment  and  street  improvement 
funds,  and  it  was  in  part  to  cover  this  that  the 
floating  debt  stock  of  i860  was  issued.^  Just  how 
all  this  deficiency  had  arisen,  not  even  the  financial 
officers  understood.  It  was  at  least  not  due,  as 
were  largely  the  great  losses  of  later  years,  to  re- 
missions of  assessments  by  the  courts  on  the 
ground  of  fraud  and  irregularity. 

This  evil  of  remissions  by  the  courts,  however, 

1  Laws,  1852,  Chap.  397.  2  Comp.  Rep.,  i860,  p.  55. 

3  Comp.  Rep.,  1858,  pp.  25  ff;   i860,  p.  48. 


ASSESSME.VTS,    TAXES,   AND  ACCOUNTS     109 

found  its  basis  in  a  law  of  1858.^  With  the  per- 
fectly proper  purpose  of  preventing  injustice  and 
fraud  in  charging  the  cost  of  improvements  upon 
property  owners,  it  was  provided  that  in  case  any 
'  fraud  or  legal  irregularity '  were  alleged  to  have 
been  committed,  the  party  aggrieved  could  appeal 
to  the  supreme  court,  and  if  the  charge  were  sus- 
tained, the  assessment  should  be  vacated.  Un- 
fortunately the  too  indefinite  wording  of  this  law, 
together  with  the  absence  of  sufficiently  stringent 
provisions  for  the  reassessment  of  a  fair  charge  for 
the  benefit  actually  received,  or  for  curing  irregu- 
larities, made  an  opening  for  evasion  of  just  obli- 
gations. But  it  was  not  till  the  time  of  the  Tweed 
Ring  that  this  abuse  became  serious.^ 

In  1 86 1  '^  a  further  act  of  some  importance  took 
away  from  the  common  council  the  power  of  con- 
firming the  assessment  lists  for  street  improve- 
ments ;  and  conferred  it  upon  a  '  board  of  revision 
and  correction  of  assessments,'  consisting  of  the 
mayor,  comptroller,  corporation  counsel,  and  re- 
corder —  a  body  that  continues  to  possess  this 
important  power  to  the  present  time.  In  1865,^ 
in  connection  with  the  law  requiring  the  Central 
Park  commission   to   lay  out  the   Boulevard,  the 

1  Laws,  1858,  c.  338. 

2  Usually  the  vacations  amounted  to  not  over  $20,000  a  year  up 
to  1868.  Communication  from  Comptroller  of  New  York,  etc.,  New 
York  Senate  Documents,  1873,  No.  105,  p.  2. 

3  Laws,  1861,  Chap.  308.  *  Ibid.,  1865,  Chap.  565. 


no      PERIOD    OF  LEGISLATIVE   INTERFERENCE 

entire  control  of  opening  and  improving  streets 
above  155th  was  conferred  upon  that  board — a 
change  doubtless  dictated  by  the  usual  partisan 
motive.  A  noteworthy  feature  of  this  law  was 
that,  in  the  case  of  streets  in  this  district,  more 
than  a  mile  in  length,  only  one-half  of  the  cost  of 
opening  or  improvement  could  be  assessed  on  the 
adjoining  property,  the  remainder  falling  on  the 
general  treasury.  This  provision  was  of  special 
importance  regarding  the  cost  of  the  Boulevard 
itself.  In  1869I  the  same  restriction,  so  far  as 
opening  of  streets  was  concerned,  was  made 
applicable  to  all  streets,  of  whatever  length,  not 
laid  out  by  the  commissioners  of  1807;  and  the 
burden  thus  thrown  on  the  city  as  a  whole,  which 
was  met  by  '  city  improvement  stock,'  soon  became 
a  heavy  one. 

A  few  changes  of  some  importance,  which  have 
persisted  to  the  present  time,  were  made  during 
this  period  in  the  system  of  taxation  and  of 
accounts.  At  the  outset  the  date  at  which  the 
penalty  for  non-payment  of  taxes  should  be  added 
was  pushed  back  from  February  i  to  December  i,^ 
—  a  change  which  helped  materially  in  securing 
prompt  payment.  In  1861  ^  a  still  more  important 
provision  was  enacted,  requiring  a  certain  percent- 
age to  be  added  to  the  tax  levy  yearly  to  cover 
deficiencies  in  collection.     The  need  for  this  meas- 

1  Laws,  1869,  Chap.  920.  2  jbid.^  1850,  Chap.  121. 

3  Ibid.,  1 86 1,  Chap.  240. 


ASSESSMENTS,    TAXES,   AND   ACCOUNTS      III 

ure  had  been  emphasized  in  the  preceding  year 
by  the  necessity  of  issuing  the  large  amount  of 
funding  bonds  ^  to  cover  the  deficiency  which  had 
accumulated.  This  deficiency  had  been  caused 
partly,  to  be  sure,  by  careless  management,  which 
had  allowed  revenue  bonds  to  be  issued  where 
assessment  bonds  should  have  been  used,  but 
largely  by  failure  to  collect  taxes  levied.  Under 
the  improved  system  established  by  these  two 
laws,  Comptroller  Haws  succeeded,  by  careful  ad- 
ministration, in  reducing  the  amount  of  revenue 
bonds  outstanding  at  the  close  of  the  year  from 
nearly  five  millions  in  1859  to  zero  in  1863;  and 
throughout  the  decade  the  amount  unpaid  at  the 
end  of  each  year  was  never  considerable. 

Besides  other  innovations  introduced  by  Comp- 
troller Haws,  a  complete  reorganization  of  the 
system  of  book-keeping  was  effected.  To  describe 
in  detail  the  irregularity  and  unintelligibility  of  the 
earlier  accounts,  or  the  nature  of  the  changes  now 
made,  would  prove  tedious.  Suffice  it  to  say  that, 
while  the  broad  outlines  of  the  accounting  system 
had  been  but  little  modified  since  a  very  early 
period,  and  were  decidedly  antiquated,  each  comp- 
troller had  made  minor  changes,  especially  in  the 
extent  and  form  of  the  published  reports,  so  that 
it  must  have  been  well-nigh  impossible  for  a  citizen 
to  get  any  definite  view  of  the  city's  financial 
progress  from  year  to  year.     The  large  and  unex- 

^  Ante,  p.  102.     Comp.  Rep.,  1858,  p.  18;    1859,  p.  25. 


112      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

plained  discrepancies  and  irregularities  that  Mr. 
Haws  discovered  further  indicate  the  looseness  of 
the  management.  The  system  of  accounts  and 
reports  introduced  by  him  remains  essentially  the 
basis  of  that  existing  at  the  present  day.  If  the 
previous  administrations  had  usually  failed  to  give 
sufficient  information,  Mr.  Haws  and  his  immediate 
successors  almost  erred  in  the  opposite  direction. 
The  minutest  details  were  published  in  the  comp- 
troller's reports  themselves,  which  were  thus 
swollen  to  volumes,  printed  in  fine  type,  of  about 
300  and  200  pages  for  the  city  and  county  respec- 
tively. The  quarterly  reports  and  other  financial 
publications  grew  similarly  in  detail. 

§  20.    Goicral  Progress  of  Expenditures. 

Almost  no  other  city  has  ever  witnessed  so  rapid 
a  growth  of  yearly  expenditures  in  a  like  time  as 
did  New  York  from  1850  to  1870.  Although  the 
population  had  less  than  doubled,  increasing  from 
515,000  in  1850  to  942,000  in  1870,  the  annual 
municipal  appropriations  had  multiplied  more  than 
eight-fold,  from  $3,230,180  in  1850  to  $26,485,847 
in  1869.  The  only  halt  in  the  steady  increase  of 
expenditure  during  these  two  decades  was  in  the 
four  years  from  1859  to  1862,  when  the  appropria- 
tions, less  state  taxes,  actually  diminished  slightly ; 
there  is  reason  to  believe  that  Mr.  Haws's  con- 
scientious administration  as  comptroller  contributed 
largely  to  this  result.  The  marked  growth  of  the 
budgets  during  and  after  the  war  can  be  partly 


GENERAL   PROGRESS   OF  EXPENDITURES      II3 

accounted  for  by  the  inflation  of  the  paper  cur- 
rency. Gold  was  quoted  at  an  average  of  nearly 
200  in  1864,  so  that  the  hard-money  equivalent  of 
the  appropriations  for  that  year  would  be  only 
about  half  of  their  nominal  amount.  The  price  of 
gold  was  still  about  135  in  1869,  and  the  purchas- 
ing power  of  the  appropriations  of  that  year  was 
doubtless  less  than  $20,000,000  in  gold.  Salaries 
of  all  kinds  had  been  increased  as  an  immediate 
consequence  of  the  inflation.  It  also,  beyond  ques- 
tion, had  an  indirect  influence  on  the  expenditures 
by  its  effect  in  producing  a  general  fictitious  pros- 
perity and  inducing  speculation.  In  the  universal 
rush  of  business,  and  the  general  looseness  of 
business  methods,  it  was  natural  that  the  financial 
affairs  of  the  city  should  participate.  In  particu- 
lar, the  real  estate  speculation  had  not  a  little  to 
do  with  the  immense  augmentation  of  the  street 
improvements  from  1868  to  1873. 

The  table  in  the  appendix  (III)  shows  by  de- 
partments the  progress  of  expenditure  between 
1850  and  1869.  Excluding  the  amount  required 
for  state  taxes,  which  had  grown  enormously,  the 
greatest  leap  had  been  in  the  debt  charges.  The 
amount  paid  for  interest  and  redemption  out  of 
regular  taxes  was  nearly  four  millions  in  1869, 
almost  a  fifth  of  the  total  budget  expenditure  for 
city  and  county  purposes ;  while  if  the  amount 
being  annually  added  to  the  sinking  funds  be  also 
included,  the  yearly  debt  payments  were  now  fully 
I 


114      PERIOD    OF  LEGISLATIVE   INTERFERENCE 

a  third  of  the  city's  burdens.  The  appropriations 
for  police,  public  schools,  and  fire  protection  re- 
quired greater  increases  than  the  average  because 
of  the  comparative  newness  of  those  departments 
in  the  city,  and  in  the  case  of  the  police  because 
of  the  special  need  of  protection  during  the  war 
time.  The  judiciary  had  been  supported  chiefly 
by  the  state  in  1850:  it  was  a  large  local  expense 
in  1869.  The  expenditure  for  parks  constituted 
a  new  item  of  the  budget,  amounting  to  ;^2  50,000 
in  1869.  Most  of  the  vast  increase  in  donations 
to  asylums  and  other  private  institutions  was 
through  requirements  of  state  law,  though  the 
reckless  generosity  of  Tweed  swelled  the  amount 
in  the  last  year  or  two  of  this  period.  A  very 
large  part  of  the  increased  outlay  for  advertising, 
printing,  and  stationery  was  the  result  of  fraud 
and  corruption ;  the  amount  spent  for  these  pur- 
poses in  1869,  though  it  appeared  as  $443,768  on 
the  regular  appropriation  account,  was  in  reality 
fully  four  times  that  sum,  the  remainder  being 
charged  to  '  adjusted  claims,'  judgments,  etc.  The 
immense  amount  of  the  newly  introduced  expendi- 
tures for  armories  and  drill  rooms,  $1,450,000  in 
1869,  was  also  due  largely  to  corrupt  influences.^ 

§  21.  General  Character  of  Government.  Con- 
chision. 

It  is  very  difficult  to  form  a  just  judgment  con- 
cerning the  character  of  the  municipal  government 

1  Concerning  these  various  Ring  frauds,  ste  post,  p.  137  ff. 


GENERAL    CHARACTER    OF  GOVERNMENT      II5 

in  general  during  the  two  decades  from  1850  to 
1869,  so  extraordinary  were  the  circumstances 
under  which  it  was  conducted.  The  enormous 
increase  in  the  budget  might  seem  to  be  in  itself 
a  sufficient  condemnation  of  the  entire  system  of 
independent  departments  and  state  interference. 
And  yet  the  extravagance  and  corruption  dis- 
played by  the  city  fathers  in  the  narrow  bounds 
still  left  them,  and  above  all  their  disloyal  inclina- 
tions, give  reason  for  hesitation  in  concluding  that 
greater  economy  or  better  administration  would 
have  been  secured  by  a  continuance  of  the  sys- 
tem of  unmolested  council  government  which  had 
existed  before  1849.  We  have  indeed  noticed 
that  real  needs  had  swollen  the  expenditures  of 
some  of  the  independent  departments,  while  others 
had  kept  their  outlay  well  within  limits. 

Probably  a  municipal  government  has  never 
existed  more  conglomerate  and  unsystematic  than 
that  of  New  York  city  during  the  sixties.  There 
were  three  legislative  bodies,  elected  in  different 
manners  and  for  different  terms,  besides  an  inde- 
pendent board  of  education  elected  by  the  people. 
Half  a  dozen  important  departments  were  gov- 
erned by  commissions  appointed  by  the  governor, 
each,  almost,  composed  of  a  different  number  of 
members  and  holding  for  a  different  term  of 
years,  and  all  usually  opposed  in  politics  to  the 
locally  chosen  officers.  Another  department  was 
headed  by  commissioners  appointed  by  the  comp- 


Il6      PERIOD    OF  LEGISLATIVE   INTERFERENCE 

troller.  The  street  department,  on  the  contrary, 
was  administered  by  a  single  commissioner  ap- 
pointed by  the  mayor,  to  whom  likewise,  as  it  were 
by  chance,  the  choice  of  two  or  three  other  officers 
was  still  entrusted.  The  three  executive  officers 
whom  the  people  elected  (the  mayor,  comptroller 
and  corporation  counsel)  each  held  for  a  different 
term,  and  therefore  were  often  conflicting  in  poli- 
tics. What  with  all  this,  it  is  no  wonder  that 
James  Parton,  writing  at  that  day,  exclaimed,^ 
"  Was  there  ever  such  a  hodge-podge  of  a  govern- 
ment before  in  the  world !  "  This  confusion  was 
worse  confounded  by  the  continual  direct  interfer- 
ence of  the  legislature,  deposing  officers  and  chang- 
ing terms  of  office,  and  fixing  the  expenditures  of 
the  city  in  their  minutest  details  with  most  absolute 
disregard  of  the  will  of  the  local  authorities.  Yet 
for  this  state  of  affairs  there  was  excuse  if  not 
justification.  It  was  almost  entirely  the  manifold 
result  of  the  one  consistent  policy  of  transferring 
power  from  the  Democratic  majority  in  the  city 
to  the  Republican  majority  in  the  state.  And, 
utterly  opposed  to  ordinary  political  principles  as 
was  this  policy,  many  of  the  best  citizens  of  state 
and  city  defended  it  as  an  unavoidable  necessity. 
Even  the  writer  whom  we  have  just  quoted  de- 
clares that,^  "  to  that  temporary  transfer  of  power 
from  a  completely  corrupt  to  an  incompletely  cor- 

1  "  The  Government  of  the  City  of  New  York,"  iVort/i  American 
Review,  vol.  103  (1866),  p.  456.  -  Ibid.,  p.  455. 


GENERAL    CHARACTER    OF  GOVERNMENT      WJ 

rupt  organization,  we  owe  it  that  the  city  of  New 
York  is  still,  in  some  degree,  inhabitable."  The 
policy  was  strongly  defended  too  by  the  Citizens' 
Association,^  which,  while  some  of  its  officers 
later  came  under  the  influence  of  the  Ring, 
undoubtedly  long  represented  the  highest  elements 
in  the  metropolis. 

Among  all  the  legislative  commissions  the  police 
board  alone  had  some  degree  of  reasonableness 
from  a  broader  standpoint  than  that  of  temporary 
expediency.  The  police  in  most  European  coun- 
tries are  directly  under  central  control,  for  the 
preservation  of  peace  may  often  be  a  matter  of  by 
no  means  local  importance.  Moreover,  the  times 
presented  peculiar  exigencies  in  New  York  city. 
The  danger  of  disloyal  outbreaks,  such  as  might 
threaten  the  very  stability  of  the  state  government 
itself,  reached  a  climax  during  the  war.  No  wonder 
the  Unionists  in  the  state  felt  justified  in  almost  any 
measures,  when  a  mayor  of  New  York  was  boldly 
proclaiming  sympathy  for  the  South  ^  and  confi- 
dence in  its  success,  and  even  advocating  secession 
on  the  part  of  the  metropolis  itself.  It  is  perhajjs 
not  too  much  to  say,  in  the  words  of  a  prominent 
member  of  the  constitutional  convention  of  i867,'* 

^  See,  e.g.,  their  communication  to  the  Constitutipnal  toflv(*ition 
of  1867,  Documents  of  the  Convention,  No.  136. ..  • 

'^  Mayor  Wood,  1861,  Message.  •        •  '     . 

^  Mr.  M.  I.  Townsend.  Proceedings  and  Debates  of  the  Con- 
stitutional Convention,  p.  2955. 


Il8      PERIOD    OF  LEGISLATIVE  INTERFERENCE 

that,  when  this  hostile  spirit  culminated  in  the 
great  draft  riot  of  July,  1863,  had  it  not  been  for 
the  fact  that  "  the  control  of  its  police  was  in  loyal 
hands,  in  all  human  probability,  what  was  a  mere 
mob,  continued  for  three  days,  employed  in  riot, 
arson,  and  bloodshed,  would  have  been  a  revolu- 
tion." The  same  need  for  state  control  of  the 
police  had  made  itself  felt  at  this  period  in  Buffalo 
and  other  large  cities. 

Whether,  in  view  of  the  corrupt  nature  of  the 
municipal  rulers  and  the  disloyal  character  of  great 
masses  of  the  population,  the  legislature  was  justi- 
fied in  going  so  much  further  in  domineering  the  city 
as  it  did,  is  harder  to  say.  It  is  possible,  though 
by  no  means  axiomatic,  that  by  leaving  the  city  to 
itself  the  very  seriousness  of  the  disease  would 
have  forced  the  citizens  to  rise  up  and  effect  a 
cure  from  the  root,  instead  of  applying  the  mere 
external  palliations,  themselves  attended  with  in- 
jurious effects,  that  state  interference  could  offer. 


CHAPTER   V 

THE    TWEED    RING 

The  long  period  of  disorder  in  the  municipal 
government  which  we  have  just  been  considering 
was  fermenting  within  itself  the  germs  of  still 
greater  evils.  Perhaps  it  would  be  too  severe  to 
say  that  the  gigantic  phenomenon  of  the  Tweed 
Ring  was  merely  the  logical  outcome  of  the  con- 
ditions of  the  time  and  the  character  of  the  people, 
for  surely  there  must  have  been  some  element  of 
chance  in  bringing  together  at  the  proper  moment 
such  adepts  in  corruption  as  were  the  leaders  in 
that  conspiracy.  But  while  for  more  than  a  decade 
state  interference  had  been  called  in  to  remedy  the 
misrule  of  the  city,  the  purely  local  authorities, 
perhaps  partly  as  the  very  result  of  that  interfer- 
ence, had  been  steadily  growing  more  corrupt ;  so 
that  the  way  was  prepared  for  an  unprecedented 
era  of  misgovernment,  the  moment  central  influence 
should  cease  to  be  exercised  or  should  be  exercised 
in  the  opposite  direction.  With  the  close  of  the 
war  and  the  absorption  of  the  people  in  the  gen- 
eral rush  of  business  and  speculation,  the  spirit  of 
patriotism,    which    had    so    largely    animated    the 

119 


I20  THE    TWEED   RING 

State  administration,  decayed.  The  long  Repub- 
lican rule  in  the  legislature  finally  gave  way ; 
Tammany  Hall,  which  represented  all  that  was 
worst  in  politics,  obtained  control,  and  instead  of  a 
restraining  influence,  the  legislature  now  became 
an  obedient  and  powerful  tool  in  the  hands  of  the 
city's  spoilers. 

§  22.  Origin  and  Grozvth  of  the  Ring  to  1870.^ 
William  M.  Tweed,  born  in  1823,  had  been  in 
city  office  from  his  very  youth.  First  the  foreman 
of  a  fire  engine  company,  he  next  became  a  mem- 
ber of  that  famous  city  council  of  1851-1852,  and 
indeed  was  a  leader  in  its  corrupt  schemes  of  fran- 
chise selling  and  contract  jobbery.  He  succeeded 
then  in  getting  elected  to  Congress  for  one  term. 
In  1857  he  was  chosen  one  of  the  newly  created 
board  of  county  supervisors,  a  position  which  he 
held  till  1870.  It  was  here  that,  as  early  as  i860, 
Tweed  and  two  others  combined  to  secure,  by 
various  means,  percentages  upon  bills  approved  by 
the  board.  Others  were  gradually  added  to  the 
'  Supervisors'  Ring '  till  six  or  seven  of  the  twelve 
members  belonged  to  it.  The  methods  of  pecula- 
tion up  to  1868  were  somewhat  irregular  as  com- 
pared with  the  later  systematic  frauds ;  the  amount 

1  For  the  general  historical  statements  in  this  chapter,  I  have 
followed  to  considerable  extent  the  articles  of  Charles  F.  Wingate, 
"  An  Episode  in  Municipal  Government,"  N'orth  American  Review, 
vols.  119,  120,  121,  123.  All  financial  statements  are  taken  from 
official  documents  duly  cited. 


ORIGIN  AND    GROWTH  TO    iSyo  121 

added  to  bills  for  the  benefit  of  the  Ring  was  usu- 
ally only  15  per  cent,  while  the  bills  themselves 
had  some  basis. 

Meantime  Tweed  had  been  gaining  power  in  an- 
other direction.  Tammany  Hall,  which  had  been 
divided  and  had  lost  influence  just  before  the  war, 
was  reorganized  with  the  basest  elements  in  con- 
trol. Tweed  became  chairman  of  the  general  com- 
mittee in  1863,  and  remained  such  till  his  fall,  a 
party  dictator  of  the  most  absolute  type.  It  was 
the  control  thus  obtained  over  the  votes  of  a  vast 
section  of  the  people  that  was  long  the  chief 
defence  of  the  Ring.  In  the  same  year  Tweed 
became  deputy  street  commissioner,  with  entire 
power,  as  his  chief  had  been  elected  a  state  sen- 
ator. This  position,  too,  he  retained  till  1870,  in 
spite  of  his  own  election  to  the  senate  in  1868. 
The  work  of  this  department,  especially  in  assess- 
ment enterprises,  grew  amazingly  under  his  admin- 
istration, and  not  only  were  great  opportunities  for 
private  gain  afforded,  but  the  patronage  of  the  de- 
partment was  of  immense  importance  in  strengthen- 
ing the  Tammany  '  machine.' 

The  Supervisors'  Ring  was  too  large  and  un- 
wieldy, and  its  hold  on  the  city  treasury  was  too 
indirect,  to  permit  the  wholesale  plundering  that 
Tweed  desired.  A  narrower  and  more  efficacious 
Ring  must  be  formed.  Peter  B.  Sweeney,  the  city 
chamberlain  and  county  treasurer,  and  Richard  B. 
Connolly,    the    comptroller,    possessed   just    those 


122  THE    TWEED  RING 

financial  powers  which  were  needed,  and  with 
these  Tweed  now  made  an  alHance.  James  Wat- 
son, auditor  in  the  comptroller's  office,  had  also  to 
receive  a  minor  position  in  the  new  Ring.  Tweed's 
membership  in  the  legislature  enabled  him  to  insert 
in  the  tax  levy  of  1868^  a  section  authorizing 
the  comptroller,  "  in  order  to  save  the  expense 
of  litigation,"  to  audit  and  pay  all  claims  outstand- 
ing against  both  city  and  county,  borrowing  the 
necessary  money  on  revenue  bonds  payable  the 
following  year.  It  is  not  apparent  that  the  dan- 
gerous nature  of  this  power  was  perceived  by  the 
legislature,  yet  surely  this  unlimited  power  of 
'  audit '  marks  a  wide  deviation  from  the  policy 
which,  only  a  year  before,  had  enacted  that  not 
even  judgments  obtained  by  due  process  of  law 
should  be  paid  when  they  exceeded  the  amount 
of  the  appropriation  concerned.  In  fact,  by  the 
practice  of  special  audits  thus  begun,  the  whole 
system  of  specific  appropriations  was  made  well- 
nigh  meaningless.  The  amount  of  claims  '  ad- 
justed '  under  this  law  during  1868  was  $2,776,900,^ 
and  on  most  of  these  45  per  cent  only  went  to  the 
claimant,  55  per  cent  to  the  city  officials.^ 

1  Laws,  1868,  Chap.  853,  §  7;   854,  §  3. 

2  Proceedings  of  the  Joint  Investigating  Committee  of  Super- 
visors, Aldermen,  and  Associated  Citizens,  1872,  pp.  115,  117, 
*  revenue  bonds.' 

^  Report  of  the  Special  Committee  of  the  Aldermen  appointed 
to  investigate  the  Ring  Frauds,  1878,  p.  397.  For  a  more  detailed 
account  of  these  fraudulent  bills,  see  post,  §  26. 


ORIGIN  AND    GROWTH   TO  1870  1 23 

In  the  fall  of  1868  came  the  general  election. 
Tammany  needed  especially  to  elect  the  governor 
and  the  mayor,  as  well  as  to  obtain  stronger  repre- 
sentation in  the  legislature.  Tweed  knew  how 
much  was  at  stake  for  him  and  mustered  his  forces 
accordingly.  Probably  no  other  election  was  ever 
held  in  a  Northern  state  where  all  manner  of 
frauds  were  so  rampant.^  An  important  factor 
in  the  result  was  the  enormous  foreign  vote, 
swollen  by  wholesale  naturalizations  on  the  part 
of  the  corrupt  judges,  Barnard,  Cardozo,  and 
McCunn,  whom  the  Ring  had  placed  in  power.^ 
Most  of  the  newspapers  at  this  time,  and  till  the 
fall  of  the  Ring,  were  in  its  support,  the  immense 
expenditures  for  city  advertising  and  printing  being 
a  powerful  instrument  in  purchasing  their  favor. 
By  such  means  as  these,  John  T.  Hoffman  was 
elected  governor,  and  A.  Oakey  Hall  was  chosen 
mayor,  while  the  Tammany  membership  in  the 
legislature  was  so  increased  that,  by  the  aid  of 
the  considerable  element  of  corrupt  Republicans, 
Tweed  could  carry  his  will  easily. 

With  this  added  power  came  added  peculation. 

^  See  Report  of  the  Select  Committee  on  the  Alleged  New  York 
Election  Frauds.  United  States  House  of  Representatives,  Reports 
of  Committees,  1868-69,  Nos.  31,41. 

2  The  number  of  aliens  admitted  to  citizenship  in  New  York 
city  during  1868  was  41,112,  as  compared  with  an  average  of  9207 
for  the  preceding  ten  years;  and  the  great  majority  of  these  were 
admitted  in  the  single  month  preceding  election.  Wingate,  North 
American  Revie^v,  vol.  119,  p.  401. 


124  THE    TWEED  RING 

To  have  followed  the  original  'adjusted  claims' 
law  and  placed  the  burden  of  the  expenditures 
under  it  immediately  on  the  already  hard-pressed 
taxpayers,  would  have  raised  an  outcry.  Through- 
out its  career  the  policy  of  the  Ring  was  to  keep 
down  present  taxes  at  the  expense  of  the  future, 
and  to  deceive  the  people  as  to  the  real  cost  of 
government.  Accordingly,  the  new  tax  law^  pro- 
vided that  the  revenue  bonds  already  issued  and 
the  future  expenditures  for  adjusted  claims  should 
be  funded  by  '  accumulated  debt  bonds,'  payable 
in  1884  and  1888.  The  fraudulent  auditing  went 
on  steadily,  and  though  this  power  was  taken 
from  the  comptroller  in  April,  1870,  it  was  not  till 
$6,500,000  had  been  added  to  the  city  debt,  and 
$6,000,000  to  the  county  debt.^  Of  moneys  paid 
on  these  claims,  the  proportion  that  went  to  the 
Ring  was  usually  65  per  cent.^  The  same  policy 
of  fictitiously  reducing  taxes  led  to  the  postpone- 
ment of  all  payments  on  the  war  debt  for  1869 
and  1870,  as  well  as  of  that  proportion  of  state 
taxes  destined  to  redeem  the  state  war  debt,  by 
the  issue  of  '  tax  relief  bonds '  to  the  amount  of 
$5,767,000.'^ 

1  Laws,  1869,  Chap.  875,  §  5;   876,  §  4. 

2  Joint  Investigating  Committee,  pp.  1 19,  121. 
^  Special  Committee  of  Aldermen,  p.  397. 

*  Payable  in  ten  and  twenty  years,  respectively.  Laws,  1869, 
Chap.  876,  §  2;  1870,  Chap.  3S3,  §  g;  Joint  Investigating  Com- 
mittee, p.  123. 


CHARTER  AND    OTHER  LAWS   OF  1870       1 25 

§  23.    Charter  and  OtJier  Laivs  of  1870. 

The  Ring,  despite  its  triumph  in  the  election  of 
1868,  felt  by  no  means  secure.  The  evident  mis- 
government  of  1869  had  aroused  ominous  mutter- 
ings.  Moreover,  in  the  ranks  of  Tammany  itself 
was  growing  a  strong  disaffection,  headed  by 
James  O'Brien,  sheriff  of  the  county.  The  Ring 
hardly  dared  risk  another  mayoralty  election.  An 
attempt  must  be  made  to  perpetuate  its  power  by 
state  law,  regardless  of  the  people's  will.  A  new 
charter  was  needed.  In  1870,  for  the  first  time  in 
twenty-four  years,  the  Democrats  had  a  majority 
in  the  legislature.  But  the  opposition  within  the 
party,  which  took  the  name  of  the  '  Young  De- 
mocracy,' threatened  to  defeat  Ring  legislation. 
The  first,  or  Frear,  charter  introduced  by  the  Ring 
was  rejected  by  a  large  majority,  and  it  seemed 
likely  that  another  bill  framed  by  the  opposition 
Democrats  would  be  adopted.  Meantime  Tweed 
had  been  removed  from  his  powerful  position  as 
deputy  street  commissioner,  and  a  strong  move- 
ment was  also  being  made  to  depose  him  from  the 
leadership  of  Tammany. 

The  Ring  was  in  dire  straits,  but  it  did  not  re- 
lincjuish  the  conflict.  Money  was  its  chief  weapon. 
Tweed  testified  afterward  that  he  paid  no  less  than 
$600,000  to  one  agent  to  be  used  in  buying  up 
members  of  the  legislature,^  the  chief  design  being 
to  secure  Republican  aid  in  passing  the  new  meas- 

1  Special  Committee  of  Aldermen,  j)p.  73,  84-87. 


126  THE    TWEED  RING 

ure  which  Tweed  now  introduced.  Strange  to  say, 
even  the  Citizens'  Association,  which  for  so  many- 
years  had  opposed  corruption,  was  brought  into 
the  support  of  the  Ring  charter  and  the  Ring 
rule ;  its  treacherous  paid  secretary  and  one  or  two 
other  leading  members  having  been  gained  over  by 
fat  offices  or  more  direct  bribes. ^  Not  a  few  worthy 
citizens  and  newspapers  were  deluded  by  certain 
fair  seeming  features  into  favoring  the  Ring  bills. 
When,  accordingly,  the  charter  introduced  by  the 
Young  Democracy  came  up  for  third  reading,  a 
sudden  shifting  of  votes  defeated  it,  and  not  long 
after  the  charter  introduced  by  Tweed  was  adopted, 
thirty  out  of  the  thirty-two  senators  voting  in  its 
favor.^  An  act  abolishing  the  old  county  board  of 
supervisors,  and  tax  levies  for  the  city  and  county, 
were  then  passed.'^ 

These  acts  delivered  the  control  of  the  city  ab- 
solutely to  the  inner  circle  of  the  Ring.  The 
legislative  commissions,  and  the  board  of  county 
supervisors,  which  had  subtracted  so  much  from 
its  authority,  were  all  done  away  —  a  change  which 
won  the  favor  of  many  people  by  no  means  sym- 
pathizing with  the  Ring  in  general.  The  heads  of 
all  the  city  departments  were  made  appointive  by 
the  mayor  for  terms  of  usually  five  to  eight  years. 

1  Special  Committee  of  Aldermen,  p.  223. 

2  Ibid.^  p.  87.     The  charter  is  Chap.  137,  Laws,  1870. 

3  Laws,  1870,  Chaps.  190,  382,  383.  The  tax  laws  had  important 
charter  features. 


CHARTER   AND    OTHER   LAWS   OF  iSjo        12"] 

In  case  of  the  death  or  removal  of  the  mayor,  his 
appointing  power  would  devolve  on  the  comptrol- 
ler, whom  he  himself  had  chosen.  The  right  of 
removing  city  officers  formerly  possessed  by  the 
governor  was  abrogated,  and  likewise  the  impeach- 
ing power  of  the  council  except  as  to  the  mayor. 
The  mayor  could  remove  officers  only  by  compli- 
cated legal  process.  The  tenure  of  the  Tammany 
officials  was  thus  not  to  be  dependent  on  the  will 
of  the  mayor,  or  on  the  will  of  the  people  —  at 
least  for  years  to  come.  The  inner  Ring  assured 
its  own  power  still  further.  The  great  department 
of  public  works  was,  almost  alone  of  the  depart- 
ments, ruled  by  a  single  officer  instead  of  by  a 
commission,  and  that  position,  of  course,  was  taken 
by  Tweed.  Hall  reappointed  Connolly  as  comp- 
troller, and  Sweeney  was  made  president  of  the 
park  department. 

Already  during  the  later  sixties  the  mayor  and 
comptroller  had  been  given  large  powers  as  re- 
gards appropriations,  to  the  detriment  of  the 
council's  authority.  The  budget  had  heretofore, 
however,  been  subject  to  very  great  modification 
by  the  legislature.  But  in  accordance  with  the 
new  general  policy  that  body  now  withdrew  its 
supervision.  The  tax  law  of  1870,  which  was  the 
last  to  prescribe  the  details  of  the  appropriations, 
provided  that  thereafter  the  chief  departments 
should  submit  their  annual  estimates  to  a  board 
consisting  of  the  mayor,  comptroller,  and  the  chief 


128  THE    TWEED  RING 

officer  of  the  department  concerned,  whose  appro- 
priating power  should  be  final  —  a  further  step 
toward  the  present  system  of  appropriations  by 
the  board  of  estimate  and  apportionment.  A  pe- 
culiar provision  regarding  the  administration  and 
finances  of  the  dock  department,  which  has  per- 
sisted to  this  day,  was  the  most  noteworthy  of  the 
other  financial  features  of  the  charter. 

Notwithstanding  the  great  opportunities  for 
plunder  that  its  added  power  under  the  new  char- 
ter would  give  in  the  ordinary  administration  of 
affairs,  the  Ring  was  not  content.  The  enormous 
outlay  for  carrying  the  elections  and  corrupting  the 
legislature  must  be  reimbursed  in  shorter  order, 
and  with  usury.  Accordingly,  as  if  with  a  view 
to  winding  up  the  affairs  of  the  old  county  organ- 
ization, a  section  was  put  into  the  county  tax  law  ^ 
authorizing  the  mayor,  comptroller,  and  president 
of  the  supervisors  (Tweed)  to  '  audit '  all  then 
existing  liabilities  of  the  county,  and  to  pay  them 
by  revenue  bonds,  nominally  redeemable  from  the 
taxes  of  1 87 1,  though,  as  in  1868  and  1869,  there 
was  no  real  purpose  that  they  should  become  an 
immediate  addition  to  taxes.  This  famous  '  ad 
interim '  board  of  audit  never  held  a  single  formal 
meeting,  though  a  fictitious  record  of  one  was 
afterwards  made  up.^  The  county  auditor,  Wat- 
son, collected  the  bills,  many  of  which  were  prob- 

1  Laws,  1870,  Chap.  382,  §  4. 

2  Special  Committee  of  Aldermen,  pp.  76,  141. 


EVENTS   OF  187 1  129 

ably  invented  after  the  passage  of  the  law,  and 
Tweed  as  chairman  approved  them.  The  board 
merely  continued  the  process  of  fraud  that  had 
been  going  on  before  under  the  comptroller's 
audits  of  1868  and  1869.  Tweed  received  25  per 
cent  of  the  face  of  the  bills  audited,  Connolly  20, 
Sweeney  10,  Watson  5,  and  Hall  (probably)  5.^ 
The  total  amount  of  '  county  liabilities '  paid  under 
this  arrangement  was  $6,413,737.^ 

§  24.  Events  of  1 87 1.  The  ^Tzvo per  Cent  Lazv.' 
At  the  general  election  in  the  fall  of  1870  Tam- 
many had  but  little  difificulty  in  reelecting  the 
governor  and  the  mayor.  In  the  campaign  the 
Democrats  were  helped  materially  by  a  device  of 
Sweeney's  to  mislead  the  people  as  to  the  finan- 
cial condition  of  the  city.  The  regular  comp- 
troller's report  for  1869  had  been  prepared,  but 
its  revelations  were  felt  to  be  too  compromising, 
and  it  was  never  given  to  the  public,  a  fact  that 
caused  not  a  little  unfavorable  comment.  To  allay 
suspicion,  half  a  dozen  very  prominent  and  wealthy 
citizens,  headed  by  John  Jacob  Astor,  were  invited 
to  come  to  the  comptroller's  office  and  investigate 
the  accounts.  In  the  few  hours  which  they  gave 
to  the  examination,  with  the  supervising  aid  of  the 
wily   comptroller,    these    gentlemen    could   by    no 

^  Special  Committee  of  Aldermen,  pp.  77,  397.  There  was  never 
absolute  proof,  save  from  Tweed's  testimony,  that  Hall  received  a 
part,  but  the  circumstantial  evidence  was  strong. 

-  Minutes  of  the  Board  of  Estimate  and  Apportionment,  vol.  i, 
p.  46. 


I30  THE    TWEED  RING 

means  arrive  at  a  thorough  understanding  of  the 
situation  ;  but  in  some  way  they  were  influenced 
or  deceived  into  reporting  that  "the  financial 
affairs  of  the  city  under  the  charge  of  the  comp- 
troller are  administered  in  a  correct  and  faithful 
manner."  The  committee  stated  that  the  city  debt 
would  be  extinguished,  at  the  rate  it  had  been  pro- 
vided for  during  Connolly's  administration,  within 
twelve  years. 

The  Ring  had  even  more  absolute  sway  in  the 
legislature  of  1871  than  in  that  of  1870.  Little 
more  legislation  was  needed  to  complete  its  grasp 
on  every  branch  of  the  city  government,  but  that 
legislation  was  forthcoming.  The  financial  meas- 
ures enacted  continued  the  general  policy  of  light- 
ening present  taxes  by  deferring  current  obligations 
to  the  distant  future.  Laws  for  the  '  consolida- 
tion '  of  the  city  and  county  debt  authorized  the 
issue  of  thirty-year  stock  to  redeem  all  bonds  of 
the  city  and  county  maturing  in  1871.^  Under 
this  authority  were  refunded  the  entire  amount  of 
county  revenue  bonds  issued  to  meet  the  audits 
of  the  'ad  interim'  board,  $2,500,000  of  city  reve- 
nue bonds  which  the  Ring's  entire  disregard  of 
appropriations  had  left  outstanding  at  the  close 
of  1870,  and  all  the  payments  due  on  the  city, 
county,  and  state  war  debts,  together  with  over  a 
million   due  gas  companies.^     At  the  time  when 

1  Laws,  1 87 1,  Chaps.  322,  323. 

^  Minutes  Board  of  Estimate  and  Apportionment,  vol.  I,  p.  46. 


EVENTS   OF  1S71  131 

the  Ring  was  ousted,  September  16,  1871,  the 
amount  of  bonds  of  this  class  already  issued  was 
over  ten  millions,  and  other  obligations  for  which 
they  could  be  issued  were  still  unfunded.^ 

The  tax  levy,  familiarly  known  as  the  '  two  per 
cent  law,'  had  a  similar  purpose  of  deluding  tax- 
payers. It  provided  that  the  total  tax  in  the  city 
and  county  for  each  year  1871  and  1872  should 
not  exceed  two  per  cent  on  the  valuation  of  1871, 
save  that  the  excess  of  state  taxes  over  those 
of  1870  might  be  added  to  this  sum.^  The  act 
did  not,  as  had  every  previous  tax  law  since  185 1, 
prescribe  the  amounts  that  should  be  allowed  to 
the  various  purposes,  but  the  sole  appropriating 
power  for  the  future  was  conferred  on  a  board, 
the  first  to  receive  the  present  title  of  '  board  of 
estimate  and  apportionment,'  composed  of  the 
mayor  (at  this  time  Hall),  the  comptroller  (Con- 
nolly), the  commissioner  of  public  works  (Tweed), 
and  the  president  of  the  department  of  parks 
(Sweeney).  These  officers  —  precisely  the  Ring 
leaders  —  were  selected,  as  Hall  (one  would  sup- 
pose ironically)  explained  in  his  message  of  June, 
1871,^  because  they  each  had  "held  a  variety  of 
elective  and  appointive  offices  in  the  city  and 
county  during   the    past    twenty  years,   were  the 

1  Joint  Inv.  Com.,  pp.  123,  138,  144,  148.  The  total  ultimately 
reached  ^13,138,000.      Cily  Record,  1873,  p.  274. 

2  Laws,  1871,  Chap.  583. 

3  Message,  p.  7. 


132  THE    TWEED  RING 

seniors  in  public  service,  .  .  .  and  were  therefore 
presumed  to  be  best  and  thoroughly  acquainted  with 
the  wants  and  exigencies  of  that  service."  Even 
if  we  were  to  grant  the  expediency  of  entrusting  the 
appropriating  power  to  a  small  body  of  executive 
officers,  it  would  be  unnecessary  to  dwell  on  the 
absurdity  of  selecting,  as  two  of  the  members  of 
such  a  board,  heads  of  departments  whose  duties 
neither  allowed  the  time  nor  furnished  the  occa- 
sion for  studying  the  general  financial  affairs  and 
needs,  and  who  moreover  themselves  were  to 
spend  a  large  proportion  of  the  money  appro- 
priated. 

The  action  of  the  new  board  in  revising  the  ap- 
propriations for  1 87 1,  which  had  already  been 
accomplished  during  the  month  of  May,  had  been 
hardly  such  as  Hall  described  in  his  message ;  but 
as  the  proceedings  had  not  been  public,  he  did  not 
expect  refutation.  The  two  per  cent  limit,  together 
with  the  excess  of  state  taxes,  allowed  a  levy  of 
$23,362,527,  to  which  $3,157,573  could  be  added 
for  the  amount  of  properly  current  expenses  to  be 
met  by  consolidated  stock.  The  general  fund, 
which  included  all  other  revenues  aside  from  taxes, 
had  been  overdrawn  more  than  $2,600,000  in  1870,^ 
and  if,  as  was  proper,  this  deficiency  should  be 
repaid,  could  now  contribute  nothing ;  otherwise 
it  could  be  counted  on  for  not  over  $2,000,000, 
which  would  increase  the  total  limit  of  the  budget 

1  Comp.  Rep.,  1870,  p.  13,  omitting  'tax  relief  fund.' 


EVENTS   OF  1871  133 

to  $28,520,100.1  In  spite  of  this  absolute  legal 
restriction,  the  appropriations  made  in  May  by 
the  board  of  estimate  and  apportionment  were 
$31,478,148.  Even  with  this  large  sum  a  great 
decrease  was  necessary  in  the  appropriations  al- 
ready voted  by  the  mayor  and  comptroller  under 
the  law  of  1870.  The  recklessness  of  the  board 
in  making  reductions  that  it  never  intended  to 
observe  is  seen  in  the  fact  that,  after  deducting 
fixed  sums  and  reducing  certain  salaries,  the  re- 
maining departmental  estimates  were  simply  cut 
in  half,2  regardless  of  their  merits  or  of  the 
amounts  that  had  already  been  spent.  So  great, 
indeed,  had  already  been  the  expenditure,  that  it 
would  have  been  difficult,  even  with  real  economy, 
to  keep  the  further  outlay  within  the  bounds  of  the 
budget.  As  a  matter  of  fact,  expenditures  went 
on  regardless  of  appropriations.  It  was  but  two 
months  after  the  revision  of  the  budget  that  the 
New  York  Times  made  its  exposures  and  the  pub- 
lic began  to  be  deeply  aroused.  In  September  a 
citizen  named  Foley  secured  an  injunction  to  pre- 
vent further  payments  by  the  comptroller,  charging 
that  the  two  per  cent  law  was  being  violated.  In 
view  of  this  threatening  situation,  with  the  hope 
possibly  of  once  more  deceiving  the  people  as  to 
the  state  of  the  finances,  the  board  of  estimate  now 

^  Joint  Inv.  Com.,  pp.  138  ff. 

2  Minutes  Board  of  Estimate  and  Apportionment,  vol.  i,  pp.  1S3, 
185,  197,  200. 


i34  THE    TWEED  RING 

proceeded  to  go  through  the  absurd  form  of  reduc- 
ing the  appropriations  to  the  precise  limit  of  law.^ 
But  it  was  too  late  to  prevent  the  impending  ruin. 
Only  a  few  days  later  the  comptroller's  office  was 
occupied  by  the  reformers,  and  the  true  financial 
condition  of  the  city  was  soon  made  public.  Prac- 
tically every  appropriation,  the  distribution  of 
whose  expenditure  through  the  year  was  at  all  dis- 
cretionary, had  been  already  exhausted  at  this 
date,2  and  an  immense  amount  of  liabilities  was 
left  behind.-^  Such  was  the  work  of  the  first  board 
of  estimate  and  apportionment. 

§  25.    Fall  of  tJic  Ring. 

But  we  must  go  back  a  little  to  trace  more  fully 
the  movement  that  culminated  in  this  capture  of 
the  Ring's  stronghold,  the  comptroller's  office. 
In  spite  of  many  rumblings  of  the  approaching 
earthquake,  the  Ring  felt  thoroughly  confident  of 
its  position  up  to  the  middle  of  1871.  Nor  were 
Tweed  and  his  associates  even  seriously  disturbed 
by  the  severe  comments  on  the  rapid  increase  of 
the  debt  that  were  made  when  the  mayor's  mes- 
sage, which  should  have  been  issued  in  January, 
appeared  in  June,  1871,  with  an  appendix  contain- 
ing what  purported  to  be  a  comptroller's  report 
for  1870,  which  gave  in  very  incomplete  fashion 

1  Minutes  Board   of  Estimate   and  Apportionment,   vol.  i,   pp. 

361-363- 

2  See  tables,  Joint  Inv.  Com.,  pp.  142-149. 

3  Ibid..,  p.  23. 


FALL    OF   THE   RLNG  1 35 

a  Statement  of  the  city  finances.  They  were  not 
aware  of  a  danger  long  impending,  which  suddenly 
appeared  when,  in  the  closing  days  of  July,  the 
Times  published  the  secret  accounts  known  as 
'  county  liabilities,'  including  among  other  pay- 
ments those  made  under  the  *  ad  interim '  board  of 
audit  of  1870.  The  Ring  had  taken  care  to  con- 
ceal its  account  books  from  all  save  a  few  trusted 
clerks  in  the  finance  department ;  but  by  accident 
a  friend  of  O'Brien's,  the  leader  of  the  Young 
Democracy,  who  was  in  the  office,  succeeded  in 
making  a  copy  of  this  account,  which  he  turned 
over  to  his  chief.  It  was  some  time  before  O'Brien 
was  sufficiently  exasperated  with  Tweed  to  put 
this  in  possession  of  the  Times.  The  figures 
showed  no  more  than  that  large  sums  had  been 
paid  in  a  very  short  time  to  two  or  three  firms 
for  work  and  furniture  for  the  new  court  house 
and  other  county  buildings,  but  the  vastness  of 
the  amounts  created  more  than  a  suspicion  that 
the  bills  were  fraudulent.  The  city  was  power- 
fully stirred  by  the  revelations.  Nevertheless  the 
Ring  was  not  entirely  hopeless ;  if  we  may  trust 
the  opinion  of  Samuel  J.  Tilden,  it  fully  expected  to 
carry  the  elections  of  1871,  while  its  opponents  were 
exceedingly  fearful  that  it  would  do  so.^  To  attack 
the  Ring  by  means  of  the  corrupt  courts  was  well- 
nigh  useless ;  while  to  secure  the  removal  of  its 
members   under  the  new  charter  had  been   made 

1  Tilden,  The  New  York  City  Ring,  1873,  p.  36. 


136  THE    TWEED  RING 

almost  impossible.  Mr.  Tilden,  however,  began  to 
move  energetically  to  overthrow  the  Tammany- 
wing  in  the  Democratic  state  convention.  At  last, 
moreover,  public  sentiment  was  so  aroused  that  an 
immense  mass  meeting  was  held  September  4,  at 
which  the  famous  Committee  of  Seventy  was 
created.  The  Ring  leaders  now  felt  that  affairs 
were  growing  desperate,  and  Tweed  and  Sweeney 
devised  as  a  last  expedient  the  scheme  of  sacrificing 
the  comptroller,  who  alone  was  to  be  declared 
responsible  for  all  fraud  and  mismanagement. 
Connolly  was  publicly  asked  to  resign,  but  refused 
to  do  so  and  consulted  Mr.  Tilden,  apparently  with 
a  view  to  making  him  his  counsel  if  litigation 
should  ensue.  The  latter  saw  that  it  was  of  the 
utmost  importance  to  prevent  the  Ring  from  plac- 
ing another  of  its  own  creatures  in  Connolly's 
position,  and  succeeded  in  persuading  him  to  ap- 
point, under  an  old  law,  a  deputy  with  full  power.^ 
Mr.  A.  H.  Green,  who  had  been  for  many  years 
at  the  head  of  the  Central  Park  commission,  was 
chosen  and  installed  September  16. 

During  these  negotiations  the  Ring  had  seized 
the  opportunity  to  destroy  a  great  deal  of  damaging 
evidence  —  accounts,  vouchers,  etc.  —  in  the  comp- 
troller's office.  Notwithstanding  this  fact,  with 
the  financial  centre  lost,  the  Ring  was  at  once  shut 
off  from  further  operations,  and  there  was  oppor- 
tunity, even  with  the  evidence  still  at  hand,  to  ferret 

1  Tilden,  The  iVezu  Yor/c  City  I\iug,  1S73,  pp.  42-44. 


FINANCIAL  MANAGEMENT  1 37 

out  the  frauds.  The  first  certain  proof  of  criminal 
action  was  secured  by  Mr.  Tilden,  who  by  tracing 
through  bank  accounts  the  payments  made  to  the 
suspected  contractors,  discovered  the  manner  in 
which  definite  and  large  percentages  of  them  had 
gone  to  different  members  of  the  Ring.  Even 
before  the  November  election  the  former  dictators 
of  New  York  were  known  fugitives  from  justice. 
It  is  no  part  of  our  task  to  follow  them  further  — 
to  tell  how  the  various  plunderers  escaped  punish- 
ment by  flight  or  otherwise,  save  Tweed  alone, 
who  died  in  a  felon's  cell.  It  is  of  interest  to  us 
only  to  know  that  civil  judgments  for  large  sums 
were  obtained  against  several  of  the  Ring  members 
and  contractors,  but  that  of  the  many  millions  — 
perhaps  not  less  than  ^50,000,000 — that  had  been 
stolen  outright,  only  $1,152,373  was  paid  back  to 
the  city,  at  least  up  to  1878.^ 

§  26.  Genet-al  Character  of  Ring  Financial  Man- 
agement. 

Although  much  concerning  the  financial  methods 
and  frauds  of  the  Ring  has  been  already  given  in 
connection  with  its  more  general  history,  it  is  desir- 
able to  describe  them  somewhat  more  fully  and  sys- 
tematically. Accuracy  here  is  made  difficult  by  the 
incompleteness  of  the  official  statements  that  were 
published. 

Attention  has  already  been  called  to  the  fact 
that  it  was    far   more  upon  the  permanent  debt 

^  Special  Committee  of  Aldermen,  p.  S27. 


138  THE    TWEED   RING 

than  upon  the  annual  budgets  that  the  extrava- 
gance and  peculation  of  the  Ring  made  itself  felt. 
The  appropriations  for  1869  show  the  Ring's 
influence  only  to  a  minor  degree.  In  the  next 
year,  however,  there  was  a  sudden  leap  of  over 
$4,000,000  in  the  budget,  even  if  state  taxes  be  ex- 
cluded from  the  calculation,  and  the  total  appro- 
priations reached  $30,906,263.  We  have  noticed 
that  the  gross  original  appropriations  made  in  May, 
1 87 1,  under  the  two  per  cent  law,  were  even  larger 
than  those  of  1870,  though  they  were  somewhat 
less  if  state  taxes  are  excluded.  The  reduction  in 
September  was  only  a  farce.  The  appropriations 
were  already  exhausted,  but  the  city  government 
had  to  go  on  under  the  reformers  for  the  remaining 
months.  The  actual  expenditures  on  appropriation 
account  for  1871  were  no  less  than  $36,567,825,^ 
over  eight  millions  more  than  the  limit  set  by  the 
tax  law.  Had  all  these  expenditures  been  included 
in  the  tax  levy,  even  allowing  $2,000,000  from  the 
general  fund,  the  tax  rate  would  have  been  fully 
3.2  cents  instead  of  2  cents  on  the  dollar.  It  is,  to 
be  sure,  true  that  a  large  proportion  of  the  increase 
of  current  expenditures  under  the  Ring  rule  was 
not  in  operating  expenses,  but  in  the  heavy  inter- 
est payments  required  by  the  ever-swelling  debt. 
Nevertheless,  the  table  of  appropriations  for  1871,'^ 
even  after  the  reduction  in  September,  shows  that 

1  Communication  from  the  Comptroller,  City  Record,  1S73,  p.  42. 

2  Joint  Inv.  Com.,  pp.  142-149. 


FINANCIAL   MANAGEMENT  I  39 

it  was  the  worst  forms  of  expenditure,  —  for  print- 
ing and  advertising,  the  department  of  public 
works,  etc.,  —  that  were  relatively  the  largest.  The 
allowance  for  education  was  actually  reduced  by 
nearly  one-third  from  the  appropriation  of  1869. 

But  the  figures  in  the  appropriation  account 
alone  give  no  idea  of  the  actual  payments  from 
the  treasury  for  what  should  properly  have  been 
current  expenditures  from  taxation.  For  example, 
the  sums  really  spent  for  advertising,  printing,  and 
stationery,  and  for  armories,  were  partly  covered 
by  the  appropriations  for  judgments,  but  still  more 
by  bonds  issued  under  the  special  audits.  The 
amount  reported  in  the  appropriation  tables  as 
spent  for  advertising,  printing,  and  stationery  in 
1869  was  only  $443,768.  The  investigating  com- 
mittee of  1 87 1  found  that  the  actual  payments  for 
those  purposes  in  that  year  were  $1,926,335  ;  while 
from  January  i,  1869,  to  September  16,  i87i,they 
reached  the  vast  sum  of  $7, 168,2 12, ^  and,  as  if  this 
were  not  enough,  the  new  administration  found 
further  claims  aggregating  millions  that  had  been 
left  unsettled.  These  figures  may  be  compared 
with  the  total  expended  for  the  same  objects  in 
1895,  $265,861.^  From  1869  to  1871  nearly  three 
and  a  half  millions  were  paid  to  the  Transcript,  the 
New  York  Printing  Company,  and  the  Manfactur- 
ing  Stationers,  in  each  of  which  Tweed  was  a 
partner.     The    Transcript,   and  indeed    all    of    the 

^  Joint  Inv.  Com.,  pp.  C8-73.         -  Comp.  Rep.,  1895,  P-  "^- 


I40  THE    TWEED  KING 

papers  that  received  the  largest  share  of  city 
patronage,  were  almost  unknown  sheets  whose 
chief  means  of  support  was  the  public  advertising. 
The  New  York  Printing  Company  was  confessedly 
formed  to  thrive  on  the  municipal  business  alone. 
Tweed  testified^  that  for  some  years  it  paid  annual 
dividends  of  from  $250,000  to  $350,000  on  a  capi- 
tal of  $10,000.  A  number  of  more  important 
newspapers  also  received  a  considerable  amount 
of  patronage,  which  must  have  influenced  their 
position  regarding  the  Ring  not  a  little. 

The  immense  expenditures  for  armories  and 
drill  rooms  consisted  partly  of  exorbitant  rents, 
but  more  largely  of  payments  for  '  furniture  and 
repairs,'  mostly  made  to  the  same  few  contractors 
who  were  employed  on  the  court  house.  The  total 
amount  paid  on  armories  during  the  three  years 
of  Ring  domination  was  $3,791,594,  of  which 
$3,221,865  was  for  furniture,  repairs,  and  plumbing 
that  experts  estimated  to  be  worth  little  over 
$200,000.^  When  these  figures  are  compared 
with  the  armory  expenditures  of  1895,^  less  than 
$200,000  (including  interest  on  bonds  issued  for 
building  armories),  some  idea  of  the  character  of 
the  Ring  expenditures  may  be  obtained. 

But  it  was  in    connection   with    the  new   court 

1  Special  Committee  of  Aldermen,  p.  i6o. 

2  Joint  Inv.  Com.,  pp.  44,  46. 

^  Comp.  Rep.,  1895,  pp.  92,  147  (interest  reckoned  at  four  per 
cent). 


FINANCIAL  MANAGEMENT  14I 

house  that  the  most  gigantic  frauds  were  perpe- 
trated. This  building  was  very  nearly  completed 
in  1867,  lacking  only  plastering  and  plumbing,  and 
the  cost  up  to  that  time  was  $2,600,000,  ample 
enough  surely.  In  1871  the  expenditure  charged 
on  the  books  to  the  construction  of  the  building 
was  $5,734,144,  and  that  to  furnishing  it  $2,400,558. 
Besides,  there  was  charged  to  the  construction  and 
furnishing  of  '  county  buildings,  courts,  and  offices  ' 
$5,282,229,  most  of  which,  as  there  were  few  such 
offices  outside  the  court  house,  must  be  reckoned 
with  the  cost  of  that  building,  making  twelve  or 
thirteen  millions  in  all  for  this  by  no  means  im- 
posing structure.  $641,900  was  spent  for  carpets, 
$1,937,545  for  plastering  and  frescoing,  $2,960,187 
for  furniture  and  cabinet  work.  Experts  estimated 
the  value  of  such  items,  for  which  had  been  nomi- 
nally paid  $7,289,466,  as  about  $624,000. ^  On 
nearly  all  the  bills  for  these  immense  expenditures 
on  armories  and  court  house,  the  Ring  leaders 
drew  65  per  cent  of  the  amount  paid.  The  bills 
were  for  the  most  part  presented  by  three  great 
contractors,  or  in  the  name  of  men  of  straw  con- 
nected with  them  ;  ^  their  full  amount  was  paid  to 
the  persons  presenting  the  claims,  and  the  recipi- 
ents then  turned  over  the  proper  percentage  to 
the  various  members  of  the  Ring.     A.  J.  Garvey, 

^  Figures  in  this  paragraph  all  from  Joint  Inv.  Com.,  pp.  56-65, 
190. 

'^  Special  Committee  of  Aldermen,  p.  570. 


142  THE    TWEED    RING 

who  did  plastering  and  frescoing,  drew  over  three 
milHons  from  1869  to  1871  ;  Keyser  &  Co.,  pkimb- 
ers,  nearly  that  sum ;  while  to  J.  A.  Ingersoll, 
under  three  fictitious  names,  was  paid  no  less  than 
$4,844,971.  Several  other  dealers,  who  received 
large  sums,  were  really  mere  creatures  of  Inger- 
soll. 

But  it  is  needless  to  pursue  further  the  familiar 
details  of  these  frauds  or  to  consider  the  less  ex- 
tensive peculations  in  other  departments.  Enough 
has  been  said  to  illustrate  the  Ring's  financial 
methods  in  swelling  the  debt  and  the  budget. 

§  27.    Special  Assessments. 

One  other  important  feature  of  the  Ring  finances 
should,  however,  be  mentioned.  The  opening  and 
improving  of  streets  was  carried  on  to  an  unprece- 
dented extent,  and  became  a  means  both  of  direct 
plunder  and  indirect  gain.  Reference  has  been 
made  to  the  law  of  1869  allowing  half  the  cost  of 
practically  all  opening  enterprises  to  be  charged 
on  the  city  as  a  whole. ^  Although  such  a  pro- 
vision had  been  perhaps  proper  enough  as  regards 
the  Boulevard,  which  was  intended  for  the  benefit 
of  the  general  public,  its  further  extension  could 
be  designed  only  to  permit  the  Ring  to  gather 
spoils  while  the  time  remained,  by  opening  streets 
before  they  were  demanded  and  escaping  the  out- 
cry of  the  adjoining  property  owners  by  the  re- 
moval of  part  of  their  burdens.     The  number  of 

1  See  ante,  p.  i  lo. 


SPECIAL   ASSESSMENTS  1 43 

new  streets  opened  was  very  great,  the  payments 
on  the  regular  account  alone  during  the  two  years 
1869  and  1870,  aggregating  over  eleven  millions.^ 
The  amount  of  '  city  improvement  stock '  issued 
in  three  years  to  meet  the  city's  share  in  these 
expenditures  was  $3,791,200.^  Moreover,  several 
large  enterprises,  such  as  the  widening  of  Broad- 
way and  of  Sixth  Avenue,  were  authorized  by 
special  acts  of  the  legislature,  and  part  of  their 
cost  also  was  defrayed  by  the  creation  of  perma- 
nent debt  to  the  amount  of  $1,606,939.^  Almost 
as  extensive  were  the  operations  of  the  Ring  in 
paving  and  otherwise  improving  streets,  all  of 
whose  cost  was  nominally  to  be  borne  by  the 
abutting  owners.  Nearly  ;^7,400,ooo  was  spent  on 
these  works  in  1869  and  1870.*  Furthermore,  a 
great  number  of  assessment  enterprises  begun  by 
the  Ring  had  of  necessity  to  be  carried  out  by  their 
successors,  so  that  the  expenditures  on  both  these 
accounts  were  hardly  less  in  1872  and  1873. 

These  various  enterprises,  especially  the  pave- 
ments, were  made  a  source  of  direct  jobbery  by 
the  Ring.  Testimony  is  unanimous  as  to  the 
wretched  character  of  much  of  the  work  done. 
A  large  proportion  of  the  pavements  laid  were  of 

1  Manual,  1870,  p.  719;   Comp.  Rep.  1870,  p.  10. 

2  Joint  Inv.  Com.,  p.  122. 

^  Ibid.,  p.  122,  'street  improvement '  and  'street  opening  and 
improvement'  l^onds. 

*  Manual,  1870,  p.  719;  Comp.  Rep.,  1870,  p.  10,  including 
special  items  for  6tli,  7th,  and  .St.  Nicholas  Avenues. 


144  ^^^    TWEED  RING 

wood,  a  smaller  part  of  worthless  concrete.  A 
less  immediate  form  of  profit  resulted  to  the  Ring 
from  '  inside '  speculation  in  property  affected. 
The  most  striking  instance  of  this  was  in  connec- 
tion with  the  widening  of  Broadway  from  34th  to 
59th  Street.  One  might  mention  by  way  of  illus- 
tration that  satellites  of  the  Ring  in  three  cases, 
just  before  the  award  of  damages  was  made, 
bought  lots  on  Broadway  costing  them  respectively 
$24,500,  $27,500,  and  $28,000.  A  part  only  of 
these  lots  was  taken  by  the  widening,  yet  the 
amounts  paid  for  damages  were  respectively 
$25,100,  $30,355,  and  $40,380,  while  the  owners 
retained  fronts  which,  considering  the  improve- 
ment effected  by  the  widening  itself,  were  worth 
probably  fully  the  original  cost.^ 

It  is  charged  also  that  members  of  the  Ring 
sometimes  intentionally  made  technical  errors  in 
levying  assessments  upon  lands  in  which  they 
were  directly  or  indirectly  interested,  in  order  that 
these  might  afterward  be  vacated  and  the  cost  of 
the  improvement  thrown  upon  the  general  public. 
Whether  this  was  the  purpose  or  not,  an  immense 
number  of  assessments,  in  fact,  were  set  aside 
during  these  years,  partly  because  of  mere  trivial 
irregularities,  such  as  the  failure  to  advertise  in 
some  one  of  the  many  corporation  papers,  partly 
on  account  of  just  complaints  of  fraud  and  worth- 
less work.     The  vacations  of  assessments  reached 

1  Wingate,  North  American  Revieiv,  vol.  120,  p.  131. 


THE  'CITY  DEBT  1 45 

over  half  a  million  in  1871,  and  nearly  a  million  in 
the  following  year/  while  for  several  years  there- 
after fully  as  extensive  losses  fell  annually  upon 
the  city,  largely  as  an  inheritance  from  the  assess- 
ment enterprises  begun  by  the  Ring. 

The  extent  of  these  operations,  as  well  as  of 
their  abuse,  may  be  well  estimated  by  the  increase 
in  outstanding  assessment  bonds.  The  amount  of 
these  at  the  close  of  1868,  already  swollen  by  the 
Boulevard  opening,  had  been  little  over  four  million 
dollars.  When  the  Ring  was  displaced,  in  1871, 
they  had  risen  to  $  12,592,500,^  in  spite  of  the  issue 
of  long-time  bonds  for  part  of  the  cost  of  street 
openings  and  improvements ;  while,  chiefly  as  the 
result  of  the  Ring's  policy,  this  class  of  indebted- 
ness still  kept  growing,  reaching  in  1876  the 
enormous  sum  of  $  22,37 1,400.^  ^^  shall  see  that 
a  large  proportion  of  this  amount  ultimately  had 
to  be  added  to  the  funded  debt. 

§  28.    The  City  Debt. 

Throughout  the  fight  against  the  Ring,  up  to 
the  discovery  of  the  fraudulent  payments  of 
'  county    liabilities,'    the    strongest   argument    had 

1  1870,  ^337,626;  1871,  ^521,042;  1872,  5967,791.  Communi- 
cation from  the  Comptroller,  New  York  Senate  Documents,  1873, 
No.  105,  p.  2. 

2  Joint  Inv.  Com.,  pp.  1 1 5,  117,  123,  1 24,  counting  'assessment 
fund  bonds'  of  1869-71,  as  they  should  be,  with  the  temporary 
debt. 

3  Comp.  Rep.,  1894,  p.  137. 

L 


146  THE    TWEED  RING 

been  the  rapid  increase  of  the  city  debt.  And 
well  might  this  cause  alarm.  The  total  funded  debt 
at  the  close  of  1868  was  $44,586,858,  the  debt  of 
all  classes,  less  the  sinking  fund,  $35,704,321.^ 
At  the  close  of  1870  the  funded  debt  had  risen  to 
1^68,998,146,  while,  owing  to  the  slow  increase  of 
the  sinking  fund  and  the  rapid  growth  of  revenue 
and  assessment  bonds,  the  net  indebtedness  had 
more  than  doubled  in  two  years.  No  wonder 
there  was  an  outcry  when  this  fact  was  made 
public  in  June,  1871.  When  the  Ring  was  over- 
thrown in  September,  the  funded  debt  had  taken 
another  bound  to  $81,351,158,  and  the  net  bonded 
debt  of  all  classes  was  $97,287,525,  only  ten 
millions  less  than  triple  the  debt  32  months  before. 
Moreover,  the  Ring  left  countless  liabilities  behind 
it.  The  amount  of  permanent  stocks  actually 
issued  between  the  fall  of  the  Ring  and  Septem- 
ber 1,  1874,  to  meet  obligations  incurred  by  the 
Ring,  was  no  less  than  $19,885, 591. ^  The  funded 
bonds  issued  directly  by  the  Ring  from  1869  to 
1871  were  $41,724,624,  so  that  the  total  addition 
to  the  permanent  debt  due  to  this  brief  reign  of 
corruption  was  over  sixty-one  millions.  Possibly 
ten  millions  more  of  the  assessment  bonds  still 
unfunded  in  1874  may  likewise  be  fairly  charged 
directly  to  the  Ring. 

1  Figures  all  from  Joint  Inv.  Com.,  pp.  III-124. 

2  A.  H.  Green,  Municipal  Debt  of  Netv    York,   1874,  pp.    15, 
16. 


THE    CITY  DEBT  1 47 

The  issues  of  stocks  that  had  contributed  most 
largely  to  this  enormous  increase  of  forty-one  mil- 
lion dollars  from  1869  to  1 87 1  have  been  already 
described ;  namely,  those  caused  by  the  special 
audits,  the  postponement  of  maturing  war  debt, 
and  the  payment  of  the  city's  share  of  street 
enterprises.  Several  other  minor  additions  had 
been  made.^  Besides  further  bonds  to  complete 
improvements  in  the  water  supply  already  com- 
menced, a  million  was  added  to  the  debt  in  1871 
by  the  laying  of  water  mains,^  undertaken  on  an 
unprecedented  scale.  The  improvement  of  Cen- 
tral Park  was  still  going  on,  and  in  the  year  1870 
especially  Sweeney  managed  to  use  a  large  sum, 
$616,600.  Other  bond  issues  were  for  the  construc- 
tion of  lunatic  asylum  buildings,  for  the  payment 
of  some  rather  fraudulent  charges  for  suburban 
firemen  and  the  improvement  of  the  fire  telegraph, 
and  for  the  first  instalment  on  the  Brooklyn  bridge. 
Of  all  the  immense  expenditures  actually  made  on 
the  court  house  during  the  Ring  rule,  only  $600,000 
was  met  by  stocks  nominally  intended  for  that  pur- 
pose. The  peculiar  arrangement  of  the  dock  de- 
partment, under  the  charter  of  1870,  required  all 
its  expenditures  to  be  paid  out  of  bonds,  but  only 
half  a  million  had  been  issued  up  to  the  fall  of  the 
Ring.  The  following  table,  showing  the  funded 
debt  contracted  from  January  i,  1869,  to  Septem- 

^  Figures  in  general  from  the  tables  just  cited. 
2  Laws,  1871,  Chap.  213. 


148 


THE    TWEED  RING 


ber  1 6,  1871,  will  serve  as  a  summary  of  the  Ring's 
debt  operations  :  ^ 

Debt  created  by  Tweed  Ring 


Water  supply,  four  issues 

Central  Park  improvement 

Public  buildings  — 

County  court  house  ....       %  600,000 
Ninth  district  court  house  .     .         300,000 

Lunatic  asylum 700,000 

Market 181,000 

Repairs  to  buildings  (county)         100,000 

Street  improvement 

Dock  bonds 

Fire  department 

Brooklyn  bridge 

War  purposes 

Repayment  of  taxes 

Funding  old  and  floating  debt  — • 

'  Accumulated  debt '       .     .     .     12.500,000 

Consolidated  stock  (partly  for 

postponed  war  debt)  .     .     .     10,325,000 

Tax  relief  bonds 5,767,000 

Total  issues 

Debt,  January  i,  1869 

Redemptions,  1869-71 

Funded  debt,  September  16,  187 1 


$  2,536,000 
1,041,600 


5.653,139 

500,000 

921,952 

450,000 

90,000 

58,932 


28,592,000 


;  41,724,624 
44,586,858 


86.311,482 
4,960,324 


$81,351,158 


^  Joint  Inv.  Com.,  pp.  1 13-125,  correcting  typographical  errors, 
and  omitting  'assessment  fund  bonds  of  1869-71/  wrongly  classed 
as  funded  debt. 


THE    CITY  DEBT  1 49 

Of  all  these  vast  additions  to  the  debt,  only 
those  for  Croton  water  and  park  improvement 
were  made  payable  from  the  sinking  fund,  al- 
though that  fund  was  evidently  much  more  than 
sufficient  to  redeem  the  bonds  already  charged  to 
it,^  and  indeed  already  equalled  at  the  close  of  the 
Ring  period  four-fifths  of  those  bonds.  The  slow- 
ness of  the  increase  in  the  sinking  fund,  —  barely 
three  millions  in  the  three  years,  despite  the  fact 
that  there  had  been  almost  no  payments  from  it, 
—  was  a  source  of  just  complaint  at  the  time. 

It  is  a  matter  of  some  wonder  that  in  the  face  of 
its  enormous  borrowing  the  city  was  able  to  obtain 
credit  at  all.  None  of  its  bonds  sold  below  par, 
but  to  effect  this  the  rate  of  interest  had  to  be 
high  even  for  those  times.  The  large  blocks  of 
consolidated  stock  could  be  floated  at  6  per  cent 
only  by  making  them  payable,  principal  and  inter- 
est, in  gold.  On  nearly  all  the  other  bonds  issued 
from  1869  to  1 87 1,  as  well  as  on  the  temporary 
debt,  the  rate  was  7  per  cent."^  It  is  needless  to 
comment  on  the  magnitude  of  the  interest  bur- 
den thus  imposed  on  the  city;  in  1876  no  less 
than  $9,503,188,  out  of  total  appropriations  of 
$34,934,801,    went   to   the    payment   of    interest,'' 

1  Total  debt  payable  from  sinking  fund  September  16,  1871, 
524,532,216;   accumulations  of  fund,  ^19,422,333. 

'^  See  Report  of  the  Comptroller  on  the  bonded  Indelitedness, 
City  Record,  1873,  p.  274. 

8  Comp.  Rep.,  1884,  p.  88,  Table. 


150  THE    TWEED  RING 

while  even  to  this  day  that  legacy  of  misgovern- 
ment  contributes  largely  to  the  annual  budget. 

§  29.  Finances  during  the  Period  of  Reconstruc- 
tion. 

The  mere  expulsion  from  the  city  government  of 
Connolly,  Tweed,  and  Sweeney  (Hall  remained  in 
office  to  the  end  of  his  term),  and  the  stoppage  of 
downright  robbery,  by  no  means  meant  that  good 
government  was  now  assured.  A  large  number  of 
Tammany  officials,  accustomed  to  extravagance 
and  sinecures,  still  held  positions  for  long  terms. 
In  every  department  scores  of  loafers  were  drawing 
salaries.  To  straighten  out  the  general  confusion 
of  the  administration,  to  reduce  the  scale  of  ex- 
penditures, to  settle  the  numberless  claims  against 
the  city,  was  a  gigantic  task.  Mr.  Andrew  H. 
Green,  who  was  duly  appointed  comptroller  soon 
after  his  installation  as  deputy,  was  in  many  ways 
the  best  possible  man  for  this  arduous  position. 
His  integrity  was  admitted  on  all  sides,  and  it  was 
a  vice  which  certainly,  under  the  circumstances, 
approached  closely  to  a  virtue,  that  he  was  inclined 
to  run  things  with  a  high  hand,  and  to  treat  all 
claimants  somewhat  cavalierly,  so  that  some,  even 
of  those  who  recognized  fully  his  great  services, 
were  inclined  to  criticise  his  harshness.^  Not  a 
few  of  the  old  claims  presented  had  some  degree 
of  fairness;  they  were  for  work  or  materials  actu- 
ally furnished  at  the  instance  of  some  one  of  the 

1  E.g.  Neiv  York  Tribune,  December  9,  1876,  p.  4. 


FINANCES  DURING  RECONSTRUCTION      151 

many  departments  which,  quite  regardless  of  legal 
limits,  had  been  allowed  to  create  all  manner  of 
liabilities.  Others  were  purely  fraudulent.  At 
the  close  of  1874  Mr.  Green  stated  that  the  amount 
which  had  been  saved  to  the  city  since  his  accession, 
by  the  defeat  of  suits  against  the  city  and  by  final 
settlement  of  claims  without  suit,  was  $3,313,545; 
while  of  the  nearly  $7,000,000  of  bills  that  still 
remained  unadjusted,  the  city,  he  declared,  could 
be  compelled  to  pay  but  a  small  proportion,^  a 
prophecy  which  was  apparently  fulfilled.^  The 
comptroller,  moreover,  had  no  small  part  in  the 
gradual  weeding  out  of  surplus  employees  and 
the  retrenchment  in  the  extravagant  customs  that 
existed  everywhere. 

The  budget  system  was  necessarily  very  irregu- 
lar for  some  years  after  the  ousting  of  the  Ring. 
Early  in  1872  a  special  act^  of  the  legislature  au- 
thorized temporary  appropriations  to  be  made. 
The  2  per  cent  limit  that  had  been  fixed  for  this 
year  also  by  the  tax  law  of  1871  was  clearly  in- 
sufficient, in  view  of  the  great  increase  of  fixed 
charges.  Accordingly  the  limit  was  extended  to 
2|  per  cent  on  the  valuation  of  1871,  besides  the 
excess  of   state  taxes,*  the   allowable  expenditure 

1  Communication  from  the  Comptroller,  City  Record,  1875, 
pp.  361  ff. 

"^  As  appears  from  records  of  further  bond  issues  for  claims. 

*  Laws,  1872,  Chaps.  9,  29. 

*  Ibid.,  Chap.  444. 


152  THE    TWEED  RING 

being  thus  fixed  at  $32,437,525.1  The  board  of 
estimate  and  apportionment,  still  constituted  ac- 
cording to  the  Ring  charter  amendments  of  1871,^ 
apportioned  this  full  sum  in  May. 

This  tax  law  of  1872  was  the  last  of  the  long 
series  of  direct  annual  restrictions  on  the  city 
levy.  Some  further  legislative  action  regarding 
the  budget  was,  however,  necessary  from  1873  to 
1875.  For  the  former  year  no  regular  appropria- 
tion had  been  made  at  first,  the  evident  intention 
being  to  wait  till,  as  the  result  of  the  election  and 
by  legal  enactment,  the  board  of  estimate  and 
apportionment  should  be  reconstituted.  Under 
the  new  charter  of  1873,  the  president  of  the 
department  of  taxes  and  assessments  and  the 
president  of  the  aldermen  were  put  in  the  place 
of  the  commissioner  of  public  works  and  the  presi- 
dent of  the  park  department  as  members  of  this 
body.  By  special  legislative  authority,^  the  new 
board  in  June  adopted  a  budget  amounting  to  a 
sum  considerably  less*  than  the  comptroller  had 
estimated  as  necessary  six  months  before,  the 
reduction  being  accomplished  by  the  postpone- 
ment for  one  year  of  the  large  payment  for  the 

-  Including  ^2,000,000  from  general  fund,  Minutes  Board  of 
Estimate  and  Apportionment,  vol.  2,  p.  534. 

-  Hall  was  excluded  from  action  in  the  temporary  appropriations, 
but  was  given  his  usual  power  as  to  the  vote  in  May. 

3  Laws,  1873,  Chaps.  758,  779. 

*  City  Record,  1873,  pp.  25,  26.  Compare  Minutes  Board  of 
Estimate  and  Apportionment,  1S72-73. 


FINANCES  DURING  RECONSTRUCTION      1 53 

city's  share  in  the  cost  of  sinking  the  railway 
tracks  in  Fourth  Avenue  ($1,598,767),  as  well  as 
by  general  retrenchment.  Further,  with  a  view 
to  equalizing  the  burdens  of  taxation,  the  propor- 
tion of  the  city  in  the  large  deficiency  which  about 
this  time  was  discovered  in  the  state  sinking  fund, 
—  another  result  of  the  general  demoralization  of 
politics  at  the  Ring  period,  —  was  made  payable 
in  ten  annual  instalments,  beginning  1874,  instead 
of  all  being  added  to  the  taxes  of  1873.^  A  simi- 
lar revision  of  the  original  appropriations  was 
also  sanctioned  by  law  in  1874.^  The  further 
postponement  of  certain  payments,  the  entire  con- 
solidation of  the  city  and  county,^  which  did  away 
with  a  number  of  superfluous  offices,  and  con- 
tinued reduction  in  the  scale  of  expenditure  of 
the  departments  generally,  made  it  possible  to 
decrease  the  total  budget  from  $39,218,945  to 
$34,822,391,  the  tax  levy  being  lowered  from  the 
very  high  rate  of  3.40  per  cent  to  2.80  per  cent.^ 
In  the  following  year  a  law''  allowing  still  another 
postponement  of  the  cost  of  the  Fourth  Avenue 
improvement  constituted  the  last  of  these  special 
measures  for  adjusting  the  extraordinary  burdens 
resulting  from  the  Ring's  mismanagement. 

^  The  amount  of  bonds  required  for  this  purpose  was  $3,899,494. 
Laws,  1873,  Chap.  95;  Report  of  the  Commissioners  of  Accounts, 
City  Record,  1875,  P-  "po- 

'^  Laws,  1874,  Chaps.  303,  308.  ^  Laws,  1874,  Chap.  304. 

*  City  Record,  1874,  pp.  61,  699,  821  ft'. 

^  Laws,  1875,  Chap.  492. 


PART    II 

THE  PRESENT    WORKING  OF  THE 
FINANCIAL    SYSTEM 

CHAPTER  VI 

INTRODUCTION 

In  turning  now  to  a  more  minute  study  of  the 
finances  of  the  present  period  of  city  history, 
which  began  with  the  fall  of  the  Tweed  Ring,  we 
need  first  of  all  to  glance  at  the  history  of  the 
adoption  and  at  the  general  character  of  the  char- 
ter of  1873  now  in  force,  as  well  as  of  the  Greater 
New  York  charter  soon  to  take  effect;  in  order 
that  the  bearing  of  the  general  municipal  organ- 
ization upon  the  financial  system  may  be  under- 
stood. Owing  to  the  exceeding  complexity  of  the 
city's  book-keeping,  we  need  likewise  to  take  a 
rapid  general  survey  of  the  system  of  finance,  as 
an  aid  to  comprehending  the  details  which  follow. 

§  30.    Adoption  and  Character  of  the  Charter  of 

1873- 

So  powerful  was  the  revulsion  against  the 
Democrats    resulting    from    the   exposure    of   the 

IS4 


THE    CHARTER    OF  1S73  1 55 

Tweed  Ring,  that  by  the  election  of  November, 
1 87 1,  their  former  majority  in  the  legislature  was 
changed  to  a  Republican  majority  of  over  three  to 
one.^  It  was  but  natural  that  legislative  action 
should  be  taken  toward  a  new  frame  of  govern- 
ment for  the  city.  The  Committee  of  Seventy, 
comprising  many  of  the  best  citizens  of  both 
parties,  devised  a  charter^  whose  purpose  appears 
to  have  been  purely  to  secure  better  government, 
although  the  method  by  which  chiefly  this  was 
to  be  brought  about,  minority  representation,  was 
necessarily  favorable  to  the  Republican  party  in 
the  city.  Although  the  Seventy's  proposed  char- 
ter can  scarcely  be  said  to  have  contributed  largely 
toward  moulding  the  form  of  government  actually 
enacted  in  1873,  nevertheless  their  propositions 
have  no  little  interest  as  showing  the  best  thought 
of  the  time  as  to  reform  methods,  struck  out  in 
the  very  presence  of  the  evils  whose  remedy  was 
sought. 

The  great  evil  of  the  Tweed  charter  had  been 
the  well-nigh  absolute  independence  and  irrespon- 
sibility of  the  executive  departments.  The  mayor 
had  almost  no  control  over  the  administration, 
while  the  council  had  practically  no  power  as  re- 

1  Tribune  Almanac,  1872,  p.  67. 

2  Published  in  pamphlet  form,  1872.  It  constitutes  Assembly 
Bill,  No.  118,  of  1872.  The  names  of  the  committee  who  drafted 
the  charter  included  several  well-known  citizens  and  publicists  of 
high  reputation.     See  Neiv  Yo7-k  Times,  January  17,  1872,  p.  i. 


156  INTRODUC  TION 

gards  either  appropriations  or  appointments.  The 
absence  of  responsibility  and  of  publicity  regard- 
ing financial  matters  had  proved  especially  danger- 
ous. It  was  perhaps  natural,  accordingly,  that  the 
powerful  reaction  against  the  Ring  system  should 
lead  the  Seventy  to  propose  a  change  in  the  rela- 
tions of  the  executive  and  legislative  branches 
nearly  as  radical  as  that  made  in  1849,  and  pre- 
cisely its  opposite.  Council  government,  which 
had  existed  up  to  the  middle  of  the  century,  was 
to  be  reinstated  in  somewhat  modified  degree. 
The  low  character  which  the  city  council  had 
taken  on  was  to  be  raised,  and  proper  restraint 
within  its  own  ranks  was  to  be  secured,  by  in- 
creasing the  number  of  members  to  forty-five,  but 
more  especially  by  the  plan  of  minority  represen- 
tation, which  found  a  precedent,  though  scarcely  a 
favorable  one,  in  the  old  system  of  electing  county 
supervisors.  On  the  other  hand,  the  check  of  a 
second  body  in  the  council  seemed  to  the  commit- 
tee unnecessary.  It  was  probably  more  than  any 
other  motive  the  desire  to  render  possible  a  curious 
and  scarcely  wise  extension  of  minority  represen- 
tation into  the  executive  branch  of  the  government, 
that  led  to  the  proposal  of  commission  heads  in 
all  departments,  even  including  that  of  finance. 
These  boards  were  to  be  composed,  with  one  or 
two  exceptions,  of  five  members,  one  appointed  by 
the  mayor,  the  others  elected  by  the  council,  each 
member  of  which  could  cast  four  votes,  cumulating 


THE    CHARTER    OF  1873  1 57 

them  as  he  saw  fit.  In  entire  contrast  with  the 
long  terms  under  the  existing  law,  the  tenure  of 
office  of  all  executive  officers  was  reduced  uni- 
formly to  one  year,  which  was  also  to  be  the  term 
of  the  aldermen.  The  government  was  thus  to  be 
brought  into  close  touch  with  the  will  of  the  people. 
The  mayor  could  remove  summarily  his  appointees 
and  the  council  theirs,  while  the  mayor,  on  assign- 
ing cause  to  the  council,  could  remove  any  officer. 
The  provision  for  the  budget  made  by  this  pro- 
posed charter  resembles  somewhat  that  under  the 
Greater  New  York  charter,  but  was  perhaps  supe- 
rior to  it.  The  comptroller  and  the  four  other 
'  commissioners  of  the  treasury '  were  primarily 
to  prepare  the  budget.  The  aldermen  should 
possess  the  sole  appropriating  power,  but  could 
only  decrease  and  not  increase  the  estimates  of 
the  finance  commission,  a  provision  apparently 
copied  from  European  parliamentary  customs. 
The  commissioners  of  the  treasury  were  author- 
ized to  take  part  in  the  debates  of  the  council 
regarding  the  appropriations.  Full  financial  re- 
ports of  all  departments  were  to  be  made  monthly 
to  the  finance  commissioners,  who  in  turn  were  to 
publish  a  monthly  report.  An  amendment  to  the 
bill,^  made  in  the  senate,  contained  an  interesting 
provision  that  the  city  accounts  should  be  audited 
annually  by  a  committee  appointed  by  the  council. 
Many  detailed  regulations  were  inserted,  designed 

1  Assembly  Bill,  No.  750,  §  72. 


I  5  8  INTR  OD  UC  TION 

to  prevent  corruption  of  all  sorts,  the  most  impor- 
tant being  the  provision  that  any  officer  might  be 
summarily  examined  before  a  court  on  the  appli- 
cation of  a  commissioner  of  the  treasury,  or  of 
any  three  aldermen,  a  provision  which  was  prac- 
tically copied  into  the  law  of  1873.  The  sanction 
of  the  legislature  was  still  to  be  required  in  order 
to  contract  permanent  debt ;  otherwise  the  city 
should  be  left  free  from  state  control. 

This  important  bill  passed  the  legislature  by 
large  majorities,  though  of  the  Democrats  only 
a  few  reformers  from  New  York  city  voted  for 
it.^  But  Governor  Hoffman,  who  appears  to 
have  been  somewhat  under  Tammany  influence, 
vetoed  the  measure.^  In  a  previous  annual  mes- 
sage he  had  favored  minority  representation,^  but 
now  he  expressed  grave  doubts  as  to  both  its  con- 
stitutionality and  its  expediency,  characterizing  the 
system  as  an  uncertain  experiment,  and  especially 
(with  more  justice)  denouncing  its  extension  to  the 
executive  departments.  Still  stronger  objections 
were  brought  against  the  weakening  of  the  mayor 
involved  in  the  bestowal  of  such  large  appointing 
power  on  the  council.  That  some,  at  least,  of  the 
governor's  arguments  appeared  reasonable  is  per- 
haps indicated  by  the  fact  that  a  majority  in  the 
assembly  voted  against  the  bill  on  reconsideration.* 

^  Nnv  York  Times,  April  19,  1872,  p.  5. 

2  Public  Papers  of  Governor  Hoffman,  pp.  353  ff. 

3  Ibid.,  p.  26.  ■*  Journal  of  the  Assembly,  1872,  p.  1611. 


THE    CHARTER    OF  1S73  1 59 

In  the  year  following  the  defeat  of  this  measure, 
with  both  legislature  and  governor  Republican,  a 
renewed  movement  for  a  charter  was  begun.  The 
Committee  of  Seventy  were  urged  to  prepare  a 
new  draft,  but  they  were  anticipated.  Mayor 
Havemeyer,  an  anti-Tammany  Democrat  who  had 
been  elected  by  a  fusion  with  the  Republicans, 
had  already  suggested  in  his  inaugural  message  ^ 
charter  amendments  tending  to  centralize  execu- 
tive power  in  the  mayor.  While  he  also  spoke 
of  the  need  of  greater  authority  in  the  council, 
he  scarcely  pointed  out  specific  means  for  securing 
it ;  but  even  favored  the  retention  of  the  board  of 
estimate  and  apportionment,  though  with  the  sub- 
stitution of  the  president  of  the  aldermen,  and  the 
president  of  the  assistant  aldermen,  for  the  heads 
of  the  public  works  and  parks  departments,  whose 
presence  on  the  board  he  sharply  condemned.  A 
charter  embodying  many  of  these  features^  was 
prepared  by  the  Republican  central  committee  of 
the  city.  In  general,  the  new  proposals  followed 
much  more  closely  the  existing  charter  than  the 
radical  changes  sought  in  the  bill  of  1872.  Vari- 
ous modifications  in  the  measure  were  proposed 
in  the  legislature,^  but  under  the  influence  of  the 
Committee  of  Seventy  several  of  these  were  omit- 

^  Proceedings  of  the  Aldermen,  vol.  129,  pp.  17  ff. 
2  New  York  Times,  January  8,  1873,  p.  5.      Their  original  bill  is 
Assembly  Bill,  No.  i,  1873. 

^  Assembly  Bill,  No.  202,  1873. 


l60  INTRODUCTION 

ted  and  certain  changes  in  the  original  bill  were 
also  effected. 1  The  chief  amendments  which  were 
due  to  their  suggestions  were  the  insertion  of  a 
provision  for  minority  representation  as  regards 
the  council ;  and  the  slight  restriction  on  the  pro- 
posed unlimited  control  of  the  budget  by  the 
board  of  estimate  and  apportionment  afforded  by 
giving  the  aldermen  advisory  power  in  modifying 
the  appropriations.  Whether  the  Seventy  had  en- 
tirely given  up  the  idea  of  council  government,  or 
whether,  finding  themselves  unable  to  secure  that 
in  its  entirety,  they  preferred  to  concentrate  author- 
ity and  responsibility  in  the  mayor,  at  any  rate 
they  now  urged  strenuously  that  he  be  given  sole 
appointing  power ;  and  they  actually  succeeded  in 
having  the  control  of  the  aldermen  in  this  regard 
reduced  to  mere  confirmation,  in  place  of  a  com- 
plicated scheme  by  which  that  body  could  easily 
have  usurped  almost  the  entire  authority.  The 
bill  as  thus  modified  was  passed  almost  unani- 
mously,^ and  became  for  twenty-three  years  the 
general  basis  of  municipal  government.^  The  Com- 
mittee of  Seventy  publicly  expressed  their  satis- 
faction with  many  features  of  the  new  charter, 
while  condemning  other  provisions.* 

1  Resolutions   of  Committee  of  Seventy,    Times,  February   20, 
1873,  p.  8;   April  20,  p.  12. 

2  Times,  April  17,  1873,  p.  5. 

3  Laws,  1873,  Chap.  335. 

*  Times,  April  20,  1873,  p.  12. 


THE    CHARTER    OF  iSjs  l6l 

While  leaving  to  special  chapters  its  more  de- 
tailed regulations  as  to  finance,  the  general  nature 
of  the  charter  may  be  briefly  described  as  an  aid 
to  clear  understanding  of  financial  affairs. 

The  common  council,  henceforth  to  consist  of 
one  board  only,  was  not  made,  as  the  Seventy's 
charter  had  proposed,  a  large  and  all-powerful 
body.  It  was  composed  of  twenty-one  aldermen. 
The  minority  party  was  given  the  opportunity  to 
secure  representation  by  the  provision  that  three 
members  should  be  elected  on  general  ticket  from 
each  of  the  five  senate  districts,  each  person  being 
allowed  to  vote  for  two  candidates  only ;  and  that 
the  other  six  should  be  elected  from  the  city  at 
large  on  a  similar  plan.  The  organization  of  the 
departments  followed  the  Tweed  charter  quite 
closely,  the  chief  difference  being  that  some  of  the 
commission  heads  were  reduced  from  five  to  three 
members,  while  the  term  of  office  was  made  usu- 
ally six  years.  The  finance  and  public  works  de- 
partments were  continued  with  single  heads,  and 
the  comptroller  was  still  an  appointive  officer. 
The  lack  of  control  over  the  executive  departments 
on  the  part  of  either  the  council  or  the  mayor, 
which  had  been  the  evil  most  severely  censured  in 
the  previous  law,  was  but  little  remedied.  The 
mayor  had  appointed  alone :  now  his  action  re- 
quired confirmation  by  the  aldermen.  Instead  of 
having  to  impeach  the  heads  of  departments  before 
a  court,  the   mayor  could  now  remove  them,  but 

M 


1 62  INTKODUCTIOA' 

under  the  practically  prohibitory  requirement  of 
securing  the  approval  of  the  governor  after  the 
assignment  of  v^ritten  reasons  for  the  action.  The 
council  was  still  empowered  to  impeach  the  mayor 
only.  These  provisions,  combined  with  the  long 
terms  of  the  department  heads,  left  their  indepen- 
dence and  irresponsibility  well-nigh  as  complete  as 
before. 

Nor,  as  we  shall  see  hereafter,  was  the  control 
of  the  council  over  appropriations  practically  in- 
creased by  the  merely  advisory  power  in  the 
budget  which  the  new  charter  conferred.  The 
board  of  estimate  and  apportionment  was  retained, 
though,  following  in  part  Mayor  Havemeyer's 
suggestion,  its  constitution  was  made  somewhat 
more  rational  by  the  substitution  of  the  president 
of  the  board  of  aldermen  and  the  president  of  the 
department  of  taxes  and  assessments  for  the  purely 
administrative  officers  —  the  heads  of  the  depart- 
ments of  public  works  and  of  parks.  The  influ- 
ence of  the  Seventy's  charter  is  seen  in  a  section 
authorizing  the  appointment  of  three  commis- 
sioners of  accounts,  whose  duty  it  should  be  to 
examine  and  publish  quarterly  a  detailed  state- 
ment of  the  financial  condition  of  the  city,  as  well 
as  in  several  other  provisions  for  securing  the 
accountability  of  municipal  officers. 

This,  then,  was  the  law  which  resulted  from  two 
years  of  legislative  conflict  and  which  has  had 
naturally  so  much  influence  in  the  framing  of  the 


CHARTER    CHANGES  SLVCE   1873  163 

charter  for  the  greater  city.  It  was  undoubtedly 
intended  in  many  respects  to  be  a  real  reform 
measure,  and  was  quite  generally  so  considered  by 
the  public,  but  it  was  after  all  essentially  a  jumble. 
It  was  a  compromise,  not  between  government  by 
the  council  and  government  by  the  mayor,  —  which 
indeed  are  far  from  being  inconsistent  with  one 
another,  —  but  between  the  indefensible  system  of 
irresponsible  executive  departments  which  the 
Tweed  charter  had  established,  and  the  system  of 
subordination  of  departments  to  the  council,  pro- 
posed by  the  Seventy.  Moreover  the  tendency  of 
the  charter  in  practice,  if  not  in  the  expectations 
of  its  framers,  was  far  more  toward  the  former 
than  toward  the  latter  system.  The  council  ac- 
quired no  real  power  under  the  new  law,  and  it 
failed  utterly  to  improve  in  character.  The  power 
of  the  mayor  was  almost  as  limited  as  that  of  the 
council.  The  only  really  effective  control  over 
the  departments  was  that  exercised,  through  its 
hold  on  the  purse  strings,  by  the  board  of  estimate 
and  apportionment,  —  that  altogether  anomalous 
body  which  has  come  to  be  the  main  governing 
power  in  the  metropolis. 

§  31.    CJiarter  Changes  since  1873. 

It  is  not  surprising  that  such  a  frame  of  govern- 
ment as  this  should  have  failed  to  give  satisfaction. 
Many  have  been  the  proposed  changes  during  the 
past  two  decades,  and  two  or  three  of  considerable 
importance  have  actually  been  accomplished. 


1 64  INTR  OD  UC  TION 

The  first  general  amendment  was  the  abandon- 
ment of  minority  representation  in  1882,^  a  change 
of  less  importance  because  of  the  insignificant 
power  which  belonged  to  the  council.  None  even 
of  the  champions  of  good  government  seemed  to 
consider  the  dropping  of  the  system  of  any  serious 
consequence.  Probably  it  was  less  the  effect  of 
the  new  method  of  election  than  the  new  opportu- 
nities presented  by  the  restored  power  to  grant 
street  railway  franchises,  that  led  to  such  corrup- 
tion as  to  make  the  name  of  alderman  for  some 
years  after  1882  a  byword  and  a  hissing.  The 
panacea  by  which  it  has  been  sought  to  remedy 
the  abuse  of  power  by  the  council  has  been  a 
constant  reduction  in  its  sphere  of  authority,  until 
to-day  words  can  hardly  express  the  ridicule  which 
is  heaped  upon  the  mere  shreds  of  governmental 
control  which  remain  to  this  once  honorable  and 
powerful  body. 

While  the  council  has  thus  steadily  sunk  into 
insignificance,  the  demand  for  centralization  in 
some  form  has  gradually  succeeded  in  winning  far 
greater  administrative  control  for  the  mayor,  while 
the  board  of  estimate  and  apportionment  has  like- 
wise increased  its  financial  control.  For  a  long 
time  after  1873  the  mayors  complained  incessantly 
of  their  weakness.  A  senate  investigating  com- 
mittee in  1 88 1  declared  that  the  departments  were 
"  little  short  of  independent  commissions  account- 

1  Laws,  1882,  Chap.  403. 


CHARTER    CHANGES  SLVCE   1873  1 65 

able  to  no  superior,"  and  recommended  that  the 
mayor  be  given  sole  power  of  appointment  and 
removal,  without  action  of  council  or  governor.^ 
It  was  three  years  longer  before  the  right  to  con- 
firm appointments  was  taken  from  the  council,^ 
while  only  in  1895  did  the  idea  of  'one-man  rule' 
gain  the  ascendant  sufficiently  to  secure  to  the 
mayor  the  power  to  remove  summarily  any  depart- 
ment head,  within  six  months  after  taking  office.^ 

Of  recent  years  another  change  has  met  with 
some  favor  —  that  of  making  the  various  depart- 
mental commissions  bi-partisan,  or,  as  is  some- 
times said  euphemistically,  'non-partisan.'  The 
policy  throughout  the  state  in  this  matter  has  been 
very  wavering.  The  working  of  the  system  since 
its  introduction  into  the  police  board  of  the  metrop- 
olis* has  scarcely  been  the  brilliant  success  which 
was  promised. 

Considerable  hope  of  better  things  was  based 
upon  the  provision  of  the  new  constitution  of  1894,^ 
giving  to  the  local  authorities  of  cities  a  conditional 
veto  over  legislative  acts  affecting  them.  In  the 
larger  cities  this  power  rests  with  the  mayor  alone. 
The  legislature,  however,  can  override  local  disap- 
proval by  a  mere  majority  vote,  and  it  has  shown 
itself  little  inclined  to  pay  serious  attention  to  local 
wishes.     The  new  provision  is  helpful  in  securing 

1  New  York  Senate  Documents,  1881,  No.  25,  p.  2. 

2  Laws,  1884,  Chap.  43.  ■*  Und.,  1895,  Chap.  569. 

3  Ibid.,  1895,  Chap.  Ii.  ^  Const.  1894,  Art.  12,  §  2. 


1 66  INTRODUCTION 

some  measure  of  home  rule,  only  as  regards  those 
bills  which  are  passed  so  near  the  close  of  legis- 
lative session  that  no  opportunity  is  given  for  re- 
passing them  after  disapproval. 

§  32.     TJic  Greater  Neiv  York  Charter. 

The  history  of  the  measure  which  is  so  soon  to 
unite  into  one  vast  municipality  the  three  millions 
of  people  dwelling  about  New  York  harbor  is  too 
recent,  and  its  character  too  familiar,  to  need 
extended  discussion  ;  nor,  in  view  of  the  wide- 
spread opposition  to  many  features,  is  it  certain 
that  the  law  as  passed  by  the  legislature  will  long 
stand  unchanged. 

The  movement  for  consolidation  began  long  ago  ; 
but  it  was  not  till  1890^  that  the  first  definitive  step 
was  taken  by  the  establishment  of  an  investigating 
commission,  partly  chosen  by  the  state  and  partly 
by  the  local  bodies  affected.  This  commission, 
which  was  headed  by  Andrew  H.  Green,  who  had 
already  done  so  much  for  the  city,  after  long  inquiry 
as  to  the  feasibility  and  method  of  the  change,  ob- 
tained the  passage  of  an  act  in  1894,  providing  for 
the  submission  of  the  general  question  whether 
consolidation  would  be  acceptable,  to  a  vote  of  the 
communities  concerned.^  A  poll  equal  -to  from 
one-half  to  two-thirds  of  the  entire  electorate  was 
cast — a  fair  vote  on  such  a  question.  Almost  60 
per  cent  of  the  votes  in  New  York  city  were  for 
consolidation  ;  but  in  Brooklyn,  where  a  relatively 

1  Laws,  1890,  Chap.  311.  -  Senate  Documents,  1895,  ^^°'  !• 


THE    GREATER  NEW  YORK   CHARTER       167 

larger  vote  was  cast,  a  majority  of  only  a  few  hun- 
dreds favored  it.  As  the  perplexing  subject  of  the 
distribution  of  taxation  between  the  two  cities  had 
not  been  touched  on  in  the  referendum,  and  as 
absolutely  nothing  concerning  a  frame  of  govern- 
ment had  been  under  discussion,  the  election  was 
maintained  by  many  not  to  be  sufificient  warrant 
for  action  by  the  legislature  without  further  local 
approval.  Certainly  the  many  complicated  prob- 
lems that  would  later  arise  had  not  been  fully 
placed  before  the  citizens  ;  and  a  large  part  of  the 
votes,  on  both  sides,  must  have  been  cast  on  sen- 
timental or  prejudiced  grounds.  In  view  of  these 
circumstances,  the  legislature  did  not  take  imme- 
diate action  on  the  recommendation  of  the  charter 
commission,  made  to  the  session  of  1895,^  that 
the  consolidation  be  decreed,  to  take  effect  at 
some  definite  date,  and  that  further  time  for  the 
preparation  of  a  charter  be  given.  In  1896,^ 
however,  the  consolidation  bill  was  at  length 
passed,  being  largely  favored  by  the  Republicans, 
who  were  coerced  by  the  party  whip,  and  gen- 
erally opposed  by  the  Democrats.  The  veto  of 
Mayors  Strong  and  Wurster  was  overridden  by 
the  legislature.  The  consolidation  is  to  take 
effect  January  i,  1898.  Meantime  a  commission 
for  drafting  the  charter  was  created,  composed  of 
the  mayors  of  New  York,  Brooklyn,  and  Long 
Island   city,  the  state   attorney-general,  the   state 

1  Senate  Documents,  1895,  No.  7.      -  Laws,  1896,  Chap.  488. 


1 68  INTRODUCTION 

engineer,  and  lo  members  appointed  by  the  gov- 
ernor, among  whom  were  included  Ex-Mayors  Low 
of  Brooklyn  and  Gilroy  of  New  York. 

The  time  for  the  task  of  framing  a  government 
for  so  huge  and  so  complex  a  city  was  confessedly 
far  too  short.  Nevertheless  the  commission,  after 
many  hearings  and  much  labor,  succeeded  in  pre- 
senting a  charter  to  the  legislature  of  1897.  The 
Republican  party  machine  was  again  back  of  the 
measure ;  and  accordingly  without  serious  discus- 
sion, except,  perhaps,  as  to  the  composition  of  the 
police  department,  and  practically  unamended,  the 
bill  was  'jammed  through.'  Again  did  Mayor 
Strong  interpose  his  veto,^  his  objections  being 
chiefly  to  the  two-chambered  council,  the  bi-par- 
tisan commission  head  for  the  police  department, 
and  the  want  of  absolute  power  of  removal  in 
the  mayor.  Almost  without  consideration  his  dis- 
approval was  voted  down,  and  the  charter  was 
duly  signed  by  the  governor. 

Although  from  a  broad  standpoint  some  form 
of  consolidation  of  Greater  New  York  seems, 
undoubtedly,  not  only  desirable,  but  almost  inevi- 
table, there  is  no  little  basis  for  the  strong  opposi- 
tion to  the  charter  shown  in  many  quarters  and 
on  many  grounds.^  The  objections  on  the  part  of 
certain  taxpayers  of  New  York,  who  fear  increased 

1  A'eiv  York  Tribune,  April  lO,  1S97. 

2  The  financial  features  of  the  charter  are  more  fully  described 
hereafter. 


THE    GREATER  NEW  YORK   CHARTER       1 69 

burdens  as  the  result  of  the  union,  may  perhaps 
be  dismissed  as  narrow  and  selfish.  It  seems  not 
unjust  that  the  great  wealth  of  the  business  dis- 
trict of  the  consolidated  city  should  aid  in  the 
improvement  of  the  residence  district  dependent 
upon  it.  On  the  other  hand,  the  criticism  that  in 
its  technical  details  the  charter  is  confused  and 
inconsistent  is  well  founded,  although  doubtless 
these  defects  can  be  remedied  from  time  to  time 
by  amendments.  More  general  and  fundamental 
objections,  however,  may  be  urged.  The  charter 
adopts  no  definite  and  scientific  principle  of  gov- 
ernment ;  while  following  too  closely  the  compro- 
mise act  which  has  so  long  governed  the  city,  it 
has  attempted  to  introduce  new  features,  forming 
combinations  which  will,  it  may  well  be  feared, 
prove  unworkable.  The  somewhat  more  satisfac- 
tory charter  of  Brooklyn  has  contributed  but  little 
apparently  to  the  evolution  of  the  law  of  1897. 

Of  great  importance,  indeed,  if  it  shall  prove 
more  than  an  empty  name,  is  the  added  degree  of 
home  rule  conferred  upon  the  city.  Heretofore, 
every  enterprise  involving  bond  issues  has  re- 
quired special  legislative  sanction,  and  the  legis- 
lature has  often  regulated  or  usurped  entirely  the 
management  of  such  enterprises.  The  city  is  now 
to  have  power  to  undertake  all  classes  of  public 
works  and  to  issue  bonds  on  its  own  initiative. 
But  unfortunately  this  provision  will  not  prevent 
future  legislatures  from  indulging  in  the  practice. 


1 70  INTR  on  UC  TION 

SO  common  in  the  past,  of  making  mandatory  addi- 
tions to  the  city  debt ;  nor  can  one  legislature  in 
any  way  bind  its  successors  so  as  to  prevent  indefi- 
nite deductions  or  modifications,  direct  or  indirect, 
in  the  power  thus  nominally  granted.  Only  a 
constitutional  amendment  can  be  any  guaranty  of 
continued  autonomy  in  this  regard. 

Nevertheless,  there  can  be  no  doubt  that  the 
municipal  government  will  hereafter  have  greater 
independent  power  than  heretofore.  A  large  part 
of  this  added  authority  is  nominally  given  by  the 
charter  to  the  reorganized  city  council,  now  to  be 
dignified  by  the  title  'municipal  assembly.'  But 
the  combination  of  different  methods  of  govern- 
ment proposed  by  the  commissioners  is  likely  to 
prove  an  impossibility.  Declaring  that  mayor-rule 
has  worked  well,  they  have  sought  to  further  in- 
crease his  power ;  observing  the  generally  high 
opinion  in  which  the  board  of  estimate  is  held, 
they  have  resolved  to  make  it  still  stronger ;  but 
because  forsooth  the  council  ought  theoretically 
to  have  some  real  function,  the  commissioners 
have,  so  they  promise  us,  conferred  new  and 
great  authority  upon  it  also.  As  if  this  were 
not  a  sufficient  subdivision  of  power,  they  have 
gone  still  further  and  have  given  to  the  newly 
constituted  'board  of  public  improvements'  con- 
siderable control  over  great  municipal  enter- 
prises. It  seems  likely  that  the  framers  of  the 
charter  have  overshot  the  mark  in  their  attempt 


THE    GREATER  NEW  YORK   CHARTER      1 71 

to  establish  checks  and  balances.  Either  power 
will  be  so  disintegrated  that  responsibility  cannot 
be  properly  located  and  that  deadlocks  will  be  of 
frequent  occurrence ;  or,  as  is  perhaps  more  prob- 
able, the  council  and  board  of  public  improvements 
will  fail  to  acquire  any  considerable  power,  while 
the  mayor  and  board  of  estimate  and  apportion- 
ment will  continue,  as  in  the  past,  to  dictate  all 
important  matters.  Unless  a  marked  change  in 
the  character  of  the  council  is  brought  about  by 
other  influences,  it  is  doubtful  if  the  authority 
conferred  upon  it  of  finally  fixing  items  in  the 
budget,  by  decreasing  but  not  by  increasing  the 
sums  proposed  by  the  board  of  estimate,  will  prove 
of  special  significance.  Strenuous  indeed  were 
the  attempts  to  prevail  upon  the  charter  commis- 
sion to  adopt  once  more  the  system  of  genuine 
council  government  ;  but  the  prejudice  against 
the  council  was  too  strong.  Equally  urgent 
were  the  arguments  against  the  reinstatement 
of  two  boards  in  the  council,  a  system  apparently 
discredited  by  the  experience  of  New  York,  of 
Brooklyn,  and  of  many  other  cities.  The  increase 
in  the  number  of  municipal  assemblymen,  the 
lengthening  of  the  term  of  the  upper  house  to 
four  years,  and  even  the  reestablishment  of  minor- 
ity representation,  if  this  last  is  ever  accomplished 
by  constitutional  amendment,  can  scarcely  make 
much  improvement  in  the  character  of  the  council, 
so  long  as  it  remains  practically  powerless.     The 


1 7  2  INTR  OD  UC  TION 

same  is  true  of  the  interesting  provision,  appar- 
ently borrowed  from  the  charter  of  the  Committee 
of  Seventy,  allowing  department  heads  and  ex- 
mayors  seats  for  debate,  without  vote,  in  the  mu- 
nicipal assembly. 

The  design  of  the  charter  commission  to  add  to 
the  mayor's  power  finds  expression  chiefly  ia  an 
increase  of  his  term  to  four  years.  He  retains  the 
sole  power  of  appointment,  and,  as  before,  his  right 
of  summary  removal  is  limited  to  six  months  after 
taking  office.  In  face  of  great  opposition,  the  sys- 
tem of  plural  or  commission  heads  has  been  re- 
tained in  most  of  the  departments,  notwithstanding 
the  more  rational  example  furnished  by  the  Brook- 
lyn charter,  which  provides  for  single  department 
heads.  The  bi-partisan  character  of  the  police 
board  has  likewise  been  continued.  The  change 
of  policy  regarding  city  franchises,  which  does 
away  with  the  vicious  practice  of  making  per- 
petual grants,  is  probably  the  most  noteworthy 
forward  step  in  the  new  charter. 

§  33.  Outline  of  Financial  System  and  Plan  of 
Study. 

A  city's  housekeeping,  like  that  of  an  individual, 
involves  :  {a)  recurrent  revenue  from  various  sources ; 
(b)  recurrent  expenditures  for  various  objects  ;  {c)  a 
control  of  the  details  of  such  revenue  and  expen- 
diture, and  an  adjustment  between  them,  in  the 
*  budget ' ;  {d)  expenditures  for  extraordinary  pur- 
poses, to  distribute  the  cost  of  which  conveniently 


OUTLINE    OF  FINANCIAL   SYSTEM  1 73 

over  a  period  of  years  requires  the  creation  of  debt ; 
{e)  a  system  of  auditing  and  accounting.  But  into 
this  simple  classification  of  our  subject  the  actual 
financial  system  of  the  metropolis  will  fit  but 
roughly.  An  intricate  historical  development  has 
indeed  so  complicated  matters  that  comprehension 
is  very  difficult.  Thus,  what  is  technically  called 
the  budget  does  not  include  all  classes  of  recur- 
rent income  and  outlay,  those  connected  wHth  street 
improvements  and  with  debt  redemption  especially 
being  separated  —  a  fact  which  keeps  many  citi- 
zens from  appreciating  the  full  magnitude  of  the 
city's  annual  business.  The  actual  arrangement 
of  the  accounts  as  given  in  the  comptroller's  re- 
ports is  as  follows  :  — 

1.  The  'Appropriation  Account'  covers  all  ex- 
penditures for  purposes  designed  to  benefit  the 
whole  city,  including  most  of  the  payments  for  in- 
terest on  the  debt,  and  part  of  the  yearly  contribu- 
tions made  to  reduce  the  debt.  The  revenue  on 
this  account  is  chiefly  from  ad  valorem  taxes  on 
general  property,  but  a  small  nominal  addition  is 
made  from  lapsed  appropriations,  and  two  or  three 
millions  are  derived  from  sundry  sources  constitut- 
ing the  '  general  fund.' 

2.  *  Special  and  Trust  Accounts  '  are  next  distin- 
guished, the  expenditures  upon  them  being  thrown 
together  promiscuously,  while  the  receipts  from 
loans  —  including  the  immense  sums  borrowed 
temporarily  each   year  in   anticipation  of  taxes  — 


1 74  INTR  OD  UC  TION 

are  kept  separate  from  the  numerous  other  receipts, 
of  which  the  chief  are  :  {a)  -from  premium  on  bonds, 
the  proceeds  of  which  go  to  the  same  purposes  for 
which  the  principal  of  the  bonds  is  destined ;  {b)  from 
special  assessments  on  property  directly  benefited 
by  street  improvements ;  and  {c)  from  excise  and 
theatrical  licenses.  The  receipts  and  expenditures 
on  these  last  two  accounts  are  regularly  recurrent 
and  might  well  be  grouped  with  the  appropriation 
accounts,  but  are  distinguished  because  subject  by 
law  to  special  management  and  methods.  All  re- 
ceipts and  expenditures  from  loans  ought  properly 
to  be  kept  in  entirely  separate  accounts,  in  which, 
moreover,  those  on  revenue  bonds  and  on  assess- 
ment bonds  should  be  carefully  distinguished  from 
the  others. 

3.  The  '  Sinking  Fund  Accounts '  include  the 
'  sinking  fund  for  interest '  and  that  for  redemp- 
tion, to  each  of  which  certain  miscellaneous  sources 
of  income,  of  considerable  amount,  are  pledged. 
The  former  fund  is  merely  a  survival,  now  paying 
interest  on  but  a  fraction  of  the  city  debt  and 
turning  its  large  annual  surplus  into  the  redemp- 
tion fund,  which,  besides  this  transfer  and  its  own 
revenues,  receives  income  directly  from  appropria- 
tions. The  redemption  fund  accounts  are  further 
complicated  by  receipts  and  payments  in  the  rein- 
vestment of  its  accumulations. 

4.  Debt  tables  classifying  the  outstanding  city 
bonds  according  to  various  methods  complete  the 


OUTLINE    OF  FINANCIAL   SYSTEM  1 75 

essential  part  of  the  comptroller's  reports,  the  re- 
mainder being  occupied  with  certain  comparative 
statements  and  with  less  important  details. 

One  of  the  chief  reasons  for  the  distinction  from 
one  another  of  the  classes  of  accounts  mentioned 
is  that  the  management  of  the  respective  branches 
of  the  finances  concerned  is  largely  in  different 
hands,  (i)  The  control  of  appropriation  expendi- 
tures now  belongs,  practically,  exclusively  to  the 
board  of  estimate  and  apportionment,  an  anoma- 
lous and  unprecedented  body  of  five  executive 
officers  headed  by  the  mayor  and  comptroller. 
The  city  council  has  merely  advisory  power,  which 
amounts  to  nothing  at  all,  in  the  budget.  On  the 
other  hand,  neither  the  board  of  estimate  nor  the 
council  has  any  discretionary  power  worthy  of 
mention  in  regulating  the  receipts  of  the  appro- 
priation account;  the  'general  fund,'  whose  reve- 
nues are  almost  entirely  fixed  independently,  is 
simply  subtracted  and  the  remainder  raised  by 
taxes,  levied  by  a  formal  ordinance  of  the  council. 
(2)  The  authorization  of  assessment  enterprises 
belongs  partly  to  the  council  and  partly  to  a 
special  ex  officio  board,  while  the  determination 
of  the  assessments  themselves  is  also  subdivided 
among  still  other  ofBcers.  The  board  of  estimate 
has  no  voice  in  regulating  the  income  from  excise 
licenses,  but  is  empowered  to  appropriate  the  pro- 
ceeds to  charitable  institutions.  (3)  The  sinking 
funds  are  controlled  by   a   board  ot    live  conimis- 


1/6  INTRODUCTION 

sioners,  also  including  the  mayor  and  comptroller. 
Besides  formal  duties  of  debt  management,  this 
body  has  considerable  discretionary  power  in  re- 
gard to  certain  of  the  special  revenues  appropri- 
ated to  the  two  funds,  and  occasionally  is  given 
authority  to  determine  bond  issues.  (4)  The  au- 
thorization of  debt  has,  for  the  most  part,  up  to  the 
time  of  the  Greater  New  York  charter,  been  directly 
retained  in  the  hands  of  the  legislature,  though  some 
local  control  has  been  given  to  the  board  of  esti- 
mate, and  in  a  few  cases  to  other  city  officers  or 
boards. 

While,  owing  to  the  important  historical  and  in 
part  logical  reasons  which  have  led  to  some  of 
these  complications  in  the  city  accounts,  it  will 
be  impracticable  to  conduct  our  study  on  the 
simple  plan  first  outlined,  it  will  be  possible  to 
disregard  some  of  the  complexities.  We  must 
sharply  distinguish  between  recurrent  and  extraor- 
dinary receipts  and  expenditures,  and  under  the 
latter  head  the  entire  discussion  of  the  debt  and 
of  the  sinking  funds  from  the  debt  standpoint  may 
be  united  {Chap.  XI).  In  treating  recurrent  re- 
ceipts and  expenditures,  we  must  first,  in  a  pre- 
liminary section,  group  all  together  in  a  way  not 
done  by  official  reports  (sec.  34),  with  some  analy- 
sis and  comparative  study.  The  receipts  may 
then  be  studied  under  the  three  heads,  —  roughly 
but  not  strictly  corresponding  to  the  first  three 
groups  of  accounts  in  the  reports,  —  of  taxation 


RECEIPTS  AND  EXPENDITURES  1 77 

(Chap.  VII),  special  assessments  (Chap.  VIII),  and 
revenues  from  property  and  franchises  (Chap.  IX). 
The  expenditures  on  special  assessment  accounts 
will  be  studied  in  connection  with  the  receipts 
from  this  source,  so  that  only  the  appropriation 
expenditures  remain  to  be  discussed,  the  manner 
of  determining  these  in  the  budget  being  especially 
considered  (Chap.  X).  The  methods  of  auditing 
and  accounting  will  be  reviewed  in  a  final  chapter 
(XII). 

§  34.  Preliminary  View  of  Receipts  and  Ex- 
pendihires. 

To  discover  the  actual  recurrent  yearly  receipts 
and  expenditures  of  the  metropolis,  we  can  neither 
take  the  totals  on  all  the  accounts,  nor,  as  is  often 
done,  the  total  on  appropriation  account  alone. 
The  total  receipts  of  all  the  accounts  for  1896,  as 
given  by  the  comptroller,  are  as  follows  :  — 

Gross  Receipts,  1896 

Taxes $  40.887,505 

General  fund 2,017.929 

Appropriation  account 144,251 

Special  and  trust  accounts 8,425,823 

Loans 48,944,728 

Total  '  treasury '  receipts $100,420,236 

Redemption  fund  (excluding  reinvestments)    .  9.030,597 

Interest  fund 4^796,773 

Grand  total $114,247,607 

The  properly  recurrent  receipts,  however,  were 
almost   exactly  half  of  this  amount,  for  we  must 

N 


1 78  INTR  OD  UCTION 

omit  :  (i)  the  small  sum  of  lapsed  appropriations 
constituting  the  'appropriation  account,'  since  this 
is  only  nominally  income  ;  (2)  the  receipts  from 
loans,  nearly  half  of  which  are  from  revenue  bonds 
temporarily  issued  in  anticipation  of  taxes,  and  re- 
deemed before  the  close  of  the  year ;  (3)  all  the 
receipts  of  special  and  trust  accounts  except  those 
from  special  assessments  and  from  licenses,  the 
rest  being  either  premium  on  bonds  or  small  re- 
ceipts as  to  which  the  city  acts  merely  in  the 
capacity  of  trustee  ;  and  (4)  various  transfers,  es- 
pecially those  from  the  appropriation  and  interest 
fund  accounts  to  the  redemption  fund.  With  these 
changes  the  net  annual  revenues  appear  as  fol- 
lows :  — 

Net  Recurrent  Receipts,  1896 

Taxes $40,887,504 

General  fund 2,017.929 

Special  assessments 2,897.068 

Excise  licenses 3,857,097 

Theatrical  licenses 42,120 

Redemption  fund  —  net 2.879.601 

Interest  fund 4,796.773 

Total $57,378,092 

While  in  New  York  it  is  customary  enough  to  re- 
fer to  the  receipts  from  taxes  and  the  general  fund 
as  constituting  the  regular  city  income,  the  other 
revenues  above  named  ought  properly  to  be  in- 
cluded ;  in  most  cities,  indeed,  all  these  classes  of 
revenues  are  placed  in  a  single  account.     From  the 


RECEIPTS  AND  EXPENDITURES  1 79 

total  just  given,  however,  $6,402,009,  the  amount 
of  taxes  collected  for  state  purposes  by  the  city, 
should  be  subtracted,  leaving  the  net  income  for 
1896,  $50,976,083.  This  enormous  sum  is  more 
than  three  times  as  much  as  the  receipts  of  any 
other  American  city  in  1890,  nearly  four  times  as 
much  as  the  yearly  receipts  of  the  state  of  New 
York,  and  is  equal  to  about  40  per  cent  of  the 
total  receipts  of  all  our  state  governments.^  The 
United  States  census  (which  uses  a  somewhat  dif- 
ferent method  of  computation)  gives  the  receipts 
of  several  leading  cities  for  1890  as  follows  :  — 

New  York $35,740,547 

Chicago 15.484.325 

Philadelphia 15,431,810 

Boston 14,369.350 

Brooklyn 13,499,433 

St.  Louis 7,092.296 

Baltimore 6.132.437 

The  amount  of  the  annual  income  of  the  con- 
solidated metropolis  can  be  estimated  only  roughly. 
The  total  receipts  of  the  city  of  Brooklyn,  for  1895, 
aside  from  loans,  were  about  $20,500,000;^  those 

1  See  U.  S.  Census,  1890,  Wealth,  Debt,  and  Taxation,  vol.  2, 
p.  555;  New  York  State  Library  Bulletin  on  State  Finance,  1897, 
Comparison  with  census  figures  is  somewhat  misleading,  as  only 
net  revenues  from  property,  etc.,  deducting  expenditures,  are  given. 

2  The  accounts  are  very  complicated,  but  apparently  the  proper 
total  is  reached  by  deducting  from  the  general  fund  the  amount 
from  loans,  leaving  $19,397,751;  and  adding  the  receipts  of  the 
special    fund    (assessments    for    opening    streets    and    for    sewers), 


l80  INTRODUCTION 

of  Long  Island  city,  Richmond  county,  and  the 
smaller  municipalities,  perhaps  $2,000,000.  The  in- 
come of  New  York  herself  being  about  $57,500,000 
yearly,  a  round  estimate  would  probably  place  the 
annual  revenue  of  the  greater  city  at  approximately 
eighty  millions  —  much  more  than  that  of  any  other 
city  in  the  world  except  Paris.  Between  eight  and 
ten  millions  of  this  sum,  however,  would  be  in- 
tended for  state  taxes. 

More  important  in  many  ways  than  the  classifi- 
cation of  city  revenues  above  given,  according  to 
the  funds  to  which  they  go,  is  a  grouping  accord- 
ine:  to  their  source.  The  three  broadest  classes 
of  New  York's  receipts  are:  (i)  from  taxes, 
$40,887,504  in  1896,  or  71  per  cent  of  the  total 
receipts ;  (2)  from  special  assessments,  $2,897,068, 
or  5  per  cent ;  and  (3)  from  miscellaneous  sources, 
not  coming  directly  from  the  pockets  of  taxpayers, 
$13,593,522,  or  24  per  cent  of  the  recurrent  income 
of  the  city.  The  receipts  from  taxes  are  a  resid- 
ual factor,  depending  upon  the  difference  between 
appropriations  and  miscellaneous  revenues.  The 
receipts  from  special  assessments  are  supposed  to 
cover,  and  of  late  years  practically  have  covered, 
the  actual  outlay  for  street-improvement  enter- 
prises ;    their  amount   is   thus  dependent    on    the 

;^8o,i45,  of  the  redemption  fund,  $690,877,  and  those  of  the  revenue 
fund  less  the  transfer  to  the  general  fund,  $445,126,  giving  a  total 
of  $20,613,900.  Brooklyn  Comptroller's  Report,  1S95,  PP-  44'  9'  '^• 
The  Kings  county  receipts  are  included. 


RECEIPTS  AND  EXPENDITURES  l8l 

number  and  extent  of  such  enterprises,  which 
varies  greatly  with  different  conditions.  It  is  in 
regard  to  the  miscellaneous  revenues  that  careful 
financial  management  has  most  scope,  and  it  is 
to  augment  these  that  many  municipal  reformers 
have  specially  striven.  The  amount  of  these  reve- 
nues in  New  York  is  already  larger  in  proportion 
than  in  almost  any  other  American  city,^  —  its  mag- 
nitude being,  indeed,  hardly  appreciated  by  tax- 
payers, partly  owing  to  the  complications  of  the 
accounts,  —  but  there  is  yet  much  room  for  improve- 
ment in  managing  them.  Such  improvement,  to 
be  sure,  may  not  consist  merely  in  increasing  the 
income  from  these  sources,  for  many  other  than 
purely  financial  motives  enter  in  certain  cases. 

The  miscellaneous  revenues,  in  fact,  comprise 
widely  divergent  classes.  For  our  purpose,  the 
most  important  line  of  division  may  be  drawn 
roughly  between  (i)  revenues  merely  incidental  to 
the  performance  of  municipal  functions,  and  (2)  reve- 
nues from  city  property  and  franchises,  where  the 
matter  of  income  is  of  prime  importance.  To  the 
first  class,  whose  amount  is  largely  determined  by 
motives  and  circumstances  other  than  purely  finan- 
cial, belong  :  {a)  most  of  the  general  fund  revenues, 
—  interest  on  taxes  and  assessments,  proceeds  of 
sales  of  old  material,  street  sweepings,  etc.,  contri- 

1  In  Chicago,  the  large  receipts  from  Hquor  licenses  bring  the 
proportion  of  miscellaneous  revenues  ahead  of  that  in  New  York. 
Comparisons  by  census  figures  are  practically  impossible. 


1 82  INTR  OD  UCTION 

butions  by  the  state  to  the  support  of  schools,  and 
various  smaller  amounts  ;  {b)  receipts  from  fees, 
fines,  etc.  ;  {c)  receipts  from  licenses  and  permits, 
where  the  chief  purpose  is  to  restrict  or  regulate. 
The  motives  governing  the  revenues  composing 
the  second  class  are  intricate,  and  require  special 
discussion.  Meantime  they  may  be  classified, 
according  to  whether  they  involve  an  investment 
by  the  city  or  not,  into  revenues  from  property 
and  revenues  from  franchises. 

The  miscellaneous  revenues  of  New  York  for 
1896  may  be  divided,  without  too  great  separation 
of  items  grouped  by  the  official  reports,  as  follows, 
the  parentheses  indicating  the  funds  to  which  they 
mainly  go  :  — 

Miscellaneous  Revenues,  1896 
I .    Reve)iues  incidental  to  I'^unction 

a.  Fees,  fines,  etc. 

Courts  generally  (Int.  fund)     .  $     279,848 
County  clerk  and  register  (Gen. 

fund) i45'738 

Sheriff  (Gen.) 116,782 

Miscellaneous  (Gen.)      .     .     .  8,972     %      551,341 

b.  Licenses  and  permits. 
Excise  (separate)  .... 
Theatrical  (separate). 
Department  of  parks  ^  (Gen.) 
Pawnbrokers  (Int.)    .     . 
Street  vault  permits  (Red.) 

Miscellaneous  (Gen.  Red.) 


$3,857,247 
42,120 
40,180 
66,000 
141,540 
93^556         4,240,644 


1  Including  rents. 


RECEIPTS  AND   EXPENDITURES 


183 


Miscellaneous  sources. 
Sale  street  sweepings,  etc.  (Gen.)  $      33.007 
Department  of  correction  (Gen.)  32,981 
Charges  for  sewers  and  water- 
mains  (Gen.) 43.959 

Other  payments  for  service  and 

material  (Gen.)       ....  27,054 

Interest  on  taxes  (Gen.)      .     .  395,504 

Interest  on  assessments  (Gen.)  213,968 

Interest  on  deposits  (Int.)  .     .  142,064 

School  money  from  state  (Gen.)  693,771 

Miscellaneous  (Gen.  Red.)     .  5^215 


1,587,524 


2.    Revenues  fron  Property  and  Franchises 
Property. 

Rent  of  real  estate  (Int.)  . 
Sale  of  real  estate  (Red.)  . 
Croton  water  rents  (Int.)  . 
Dock  rents  (Red.)  .  .  . 
Market  rents  and  fees  (Red.) 
Net  interest  on  investments  (Int.) 

Franchises. 

Ferries  (Int.) 

Street  railways  (Gen.  Red.)     . 

Pipe-line,  steam  and  gas  (Gen. 

Red.) 


I      92,094 

35.943 

4,073,856 

2,039,015 

285.392 

36,585 

346,598 
302,111 


2,418 


6,562,885 


651,128 


Total 


$  i3,'593.S22 


I'^or  the  purpose  of  a  financial  study,  the  first 
class  of  miscellaneous  revenues,  which  comprise 
nearly  half  of  the  whole,  may  be  passed  over 
lightly.  We  may  note,  however,  that,  especially 
in  regard  to  excise  licenses,  there  have  been  many 
changes    in    policy,    partly   dictated    by    financial. 


1 84  INTRODUCTION 

partly  by  other  motives.  The  most  noteworthy 
change  was  made  in  1896,^  when  the  Raines  Hquor- 
tax  law,  while  transferring  a  fourth  of  the  revenue 
to  the  state  treasury,  so  increased  rates  that  the 
city  received  twice  as  much  from  this  source  as  in 
the  preceding  year.  The  other  class  of  miscella- 
neous revenues,  which  amounted  to  ^§7,214,013 
last  year,  will  require  thorough  study  in  a  special 
chapter. 

Bearing  in  mind  what  has  been  said  as  to  the 
varying  motives,  subject  to  change,  governing  the 
management  of  many  of  the  miscellaneous  reve- 
nues, we  may  compare  the  receipts  of  the  city  by 
decennial  periods.  (See  table  on  opposite  page.) 
That  the  miscellaneous  revenues  bore  a  greater 
proportion  to  the  tax  levy  in  1830  and  1850  than 
they  do  at  present,  was  due  less  to  their  own  large 
amount  than  to  the  limited  extent  of  the  city 
budget  in  those  days  ;  in  proportion  to  population 
they  are  now  considerably  greater  than  ever  before. 
The  comparatively  slow  growth  of  these  revenues 
from  i860  to  1870  was  but  one  result  of  the  gen- 
eral loose  financiering  of  the  time,  while  the  re- 
markable increase  since  1880  has  been  in  part  at 
least  due  to  conscious  effort  to  make  city  prop- 
erty and  franchises  more  productive. 

The  annual  expenditures  of  the  city  are  naturally 
approximately  equal  to  the  receipts.  As  above 
intimated,  the  amount   spent   on    street    improve- 

1  Laws,  1896,  Chap.  112. 


RECEIPTS  AND   EXPENDITURES 


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1 86 


INTRODUCTION 


ments,  payable  from  assessments,  does  not  appear 
ill  the  yearly  appropriations.  In  calculating  the 
payments  for  reducing  the  city  debt,  it  is  evident 
that  the  proper  method  is  to  add  to  the  sum  paid 
from  the  appropriation  account  into  the  sinking 
fund  for  redemption,  the  sum  received  annually 
from  other  sources  and  going  to  swell  the  fund's 
accumulations  ;  rather  than  to  consider  the  moneys 
actually  paid  out  of  the  fund  for  redeeming  bonds, 
which  often  vary  greatly  in  amount  in  different 
years,  owing  to  the  unequal  maturity  of  the  city 
debt. 

It  is  unnecessary  to  compare  the  total  expendi- 
tures of  New  York  with  those  of  other  American 
cities,  since  they  will  naturally  bear  about  the  same 
relation  to  one  another  as  do  the  receipts.  Suffice 
it  to  say  that,  according  to  the  census  of  1890,  the 
per  capita  expenditure  of  the  metropolis  was 
second  only  to  that  of  Boston,  and  not  far  from 
double  that  of  Chicago,  Philadelphia,  or  Brooklyn. ^ 

^  The  following  are  the  figures  given :  — 

Per  Capita  Expenditures 


Cincinnati  . 
Cleveland  . 
Buffalo  .  . 
New  Orleans 
Pittsburgh  . 
Detroit  .  . 
Milwaukee  . 


U.S.  Census,  1890,  Wealth,  Debt,  and  Taxation,  p.  556. 


New  York    . 

$24.56 

Chicago  .     . 

13.80 

Philadelphia 

13.10 

Brooklyn 

13-67 

St.  Louis 

14.45 

Boston     .     . 

32.69 

Baltimore     . 

14.02 

San  Francisco 

18.86 

?  1 8.04 
14.56 

22.41 

8.65 

12.04 

16.61 
13-36 


CHAPTER   VII 

THE    SYSTEM    OF    TAXATION 

§  35.   Outline  of  the  Tax  System} 

We  turn  now  to  a  more  detailed  study  of  the 
city  receipts.  By  far  the  most  important  source 
of  income  is  taxation  based  on  the  value  of  general 
property.  More  than  nine-tenths  of  the  expendi- 
tures on  the  '  budget '  proper  are  met  from  taxes. 
We  must  accordingly  study  the  system  by  which 
property  is  assessed  and  taxes  collected,  although, 
on  account  of  its  familiarity  and  its  resemblance 
to  that  in  force  elsewhere,  it  possesses  somewhat 
less  interest  than  other  financial  features.  Few 
important  changes  in  the  law  governing  the  sub- 
ject have  been  made  since  the  general  tax  act  for 
the  city  passed  in  1859.^ 

At  present  the  assessment  of  property  in  New 
York  city  is  under  the  supervision  of  three  '  com- 
missioners of  taxes  and  assessments,'  appointed  by 
the  mayor  for  six  years.  They  choose  about  fif- 
teen deputies  to  do  the  primary  work  of  assess- 
ment. Real  estate  is,  as  usual,  assessed  by  the 
lot  or  piece,  personal  property  to  the  individual 
holding  it.     A  separate  assessment  of  bank  shares 

^  Consolidation  Act,  §§  812-864.        '"  J-aws,  1859,  Chap.  302. 
187 


1 88  THE   SYSTEM   OF   TAXATION 

is  made,  as  in  the  rest  of  the  state,  for  the  reason 
that,  although  the  tax  is  assessed  to  the  separate 
holders,  it  is  nevertheless  collected  from  the  banks 
and  withheld  by  them  from  dividends.  The  pro- 
cess of  determining  the  taxable  valuations  for 
each  year  is  begun  by  the  deputies  in  September 
of  the  preceding  year  and  must  be  completed  by 
the  second  Monday  of  January.  From  that  time 
till  the  first  of  May,  the  assessment  books  are 
open  to  public  inspection  and  subject  to  revision. 
Persons  objecting  to  the  valuation  of  their  real 
estate  must  do  so  in  writing,  and  the  tax  commis- 
sioners will  then  take  the  matter  into  more  or  less 
careful  consideration.  On  the  other  hand,  people 
remonstrating  against  personal  assessments  must 
appear  in  person  before  one  or  more  of  the  com- 
missioners and  make  affidavit,  not  as  to  the  details 
of  their  personal  estate,  but  simply,  in  general 
form,  that  it  does  not  exceed  such  and  such  an 
amount,  —  in  other  words,  they  are  permitted  to 
'swear  off'  their  assessments  in  bulk.  Any  one 
aggrieved  by  the  decision  of  the  commissioners  as 
to  either  class  of  assessments  may  obtain  from  the 
supreme  court  a  certiorari  to  review  their  action. 
Even  after  payment  of  taxes  has  actually  begun, 
the  tax  commissioners  still  have  authority  to  remit 
or  reduce  taxes,  but  they  do  so  only  to  a  limited 
extent.  The  common  council  formerly  possessed 
and  often  abused  this  power  of  remission,  but  it 
has  now  been  taken  away  entirely  from  that  body. 


OUTLINE    OF   THE    TAX  SYSTEM  1 89 

After  the  revision  of  the  valuations  by  the  com- 
missioners of  taxes  and  assessments,  new  assess- 
ment rolls  are  prepared  and  transmitted  to  the 
aldermen,  who  ordain  the  amount  of  tax  to  be 
levied,  in  a  purely  formal  manner.^  The  addition 
that  is  made  to  the  levy  to  cover  deficiencies  is 
so  adjusted  that  the  tax  rate  need  not  be  fixed 
beyond  hundredths  of  one  per  cent.  Next  comes 
the  work  of  calculating  the  tax  for  each  piece  or 
individual.  This  requires  considerable  time,  so 
that  it  is  about  the  first  of  October  before  col- 
lection begins.  Meanwhile,  from  the  opening  of 
the  year,  the  government  has  been  carried  on 
by  means  of  money  raised  on  short-time  '  revenue 
bonds,'  which  the  city  commences  to  pay  off  as 
soon  as  taxes  come  in.  The  receiver  of  taxes, — 
who  does  not  belong  to  the  same  department  as 
the  commissioners  of  taxes  and  assessments,  but 
is  an  officer  of  the  finance  department, — immedi- 
ately on  opening  the  tax  books  must  advertise  the 
fact  that  taxes  are  now  payable.  On  all  taxes  paid 
before  November  i,  interest  at  six  per  cent  from 
the  date  of  payment  to  December  i  is  deducted. 
If  they  are  not  paid  by  December  i,  a  penalty  of 
one  per  cent  is  added,  and  if  not  paid  before  Jan- 
uary I,  interest  is  charged  thereafter  from  the  first 
day  when  the  tax  books  were  opened,  at  seven  per 
cent.  There  are  marked  differences  in  the  proced- 
ure to  collect  delinquent  personal  and  real  estate 

^  'i^t  post,  p.  255. 


I  go  THE   SYSTEM    OF   TAXATION 

taxes,  both  of  which  are  placed  in  the  hands  of  a 
special  department  of  arrears.  If  the  former  are 
unpaid  after  January  15  of  the  year  following  the 
levy,  a  distress  warrant  on  the  property  of  the  per- 
son assessed  is  issued ;  if  no  property  is  found,  a 
further  mode  of  enforcement  is  by  obtaining  from 
the  court  an  order  imposing  a  fine  sufficient  to 
cover  tax  and  costs.  On  the  other  hand,  three 
years  must  elapse  before  real  estate  can  be  sold 
for  taxes,  and  the  procedure  is  more  complicated. 

The  only  important  change  in  the  tax  system  of 
the  greater  city  will  be  an  increase  in  the  number 
of  tax  commissioners  to  five  instead  of  three,  and 
a  reduction  of  their  term  from  six  to  four  years. 

§  36.  Practical  Character  of  the  Assessment  of 
Property. 

The  following  are  the  assessed  valuations  of  New 
York  city  for  1896  :  ^  — 

Assessed  Valuations,  1896 
Personal  estate  — 

Resident $245,883,488 

Non-resident     ....  46,468,081 

Shareholders  of  banks    .  82,624,193        $374,975,762 

Real  estate 1,731,509,143 

Total $2,106,484,905 

The  most  striking  fact  about  these  figures,  were 
it  not,  unfortunately,  such  a  commonplace,  is  the 

1  Report  of  Commissioners  of  Taxes  and  Assessments,  City  Record, 
1896,  p.  2603. 


THE   ASSESSMENT   OF  PROPERTY 


191 


enormous  excess  of  the  real  estate  assessment  over 
that  of  personalty.  No  one  can  for  a  moment 
doubt  that  in  this,  the  very  centre  of  capital  in 
America,  the  personal  property  held  far  exceeds 
in  value  the  real  estate,  yet  it  is  assessed  at  but  a 
little  over  one-fifth  as  much.  The  evasion  of  per- 
sonal property  was  relatively  a  great  deal  less  up 
to  about  1870;  in  i860  it  was  assessed  at  nearly 
45  per  cent  as  much  as  realty.^  Apparently,  the 
actual  shrinkage  in  values  after  the  crisis  of  1873 
gave  the  impulse  to  a  reduction  in  personal  assess- 
ments far  greater  and  far  more  prolonged  than 
was  justifiable.  The  real  estate  valuation  likewise 
had  fallen  off  for  a  time  after  the  crash,  but  it  so 
far  recovered  by  1880  that  it  amounted  to  two 
hundred  millions  more  than  in  1870.  The  personal 
assessment  for  1880,  on  the  other  hand,  was  a  full 

1  Relative  Assessment  of  Real  and  Personal  Property 


Year 

Real 

Personal 

Proportion  of 

Personal  to 

Real  — % 

1830 

$       87,603,580 

$  37,684,938 

43 

1840 

187,221,714 

65,013,802 

34-7 

1850 

207,146,176 

78,939,240 

38 

i860 

398,533,619 

178.697,037 

44.8 

1870 

742.202.525 

305.317.699 

41. 1 

1880 

942.571.690 

201.194,037 

21.3 

1890 

1.398.290.007 

298,688.383 

21.4 

1896 

1,731,509.-143 

374,975,'762 

21.7 

192  THE   SYSTEM  OF   TAXATION 

third  less  than  in  1870;  the  proportion  borne  by 
the  personal  to  the  real  estate  valuation  had  de- 
creased during  the  decade  no  less  astonishingly 
than  from  41  to  21  per  cent.  Since  1880  there 
has  been  some  improvement.  The  assessment  of 
personal  property  has  increased  at  almost  exactly 
the  same  rate  as  that  of  real  estate ;  this  is  prob- 
ably, however,  considerably  less  than  in  proportion 
to  the  actual  growth  of  personal  wealth  in  the 
metropolis. 

It  is  not  because  the  assessors  utterly  ignore 
personalty  that  it  thus  escapes  taxation.  They 
regularly  place  on  the  rolls  at  the  outset  nearly 
double  the  number  of  names,  and  from  six  to  ten 
times  the  amount  of  property  ultimately  retained. 
There  is  no  provision  in  the  state  for  listing  per- 
sonal property  by  the  owner,  and,  in  fact,  no 
attempt  is  usually  made  to  secure  any  sort  of  an 
inventory  of  the  taxpayer's  property.  A  consider- 
able part  of  the  process  of  assessing  personalty  is 
indeed  mere  haphazard.  The  deputy  assessor 
selects  names  from  the  city  directory,  using  "his 
judgment  —  from  his  experience,  and  from  what  he 
has  passed  through  in  regard  to  the  affidavits  of 
those  who  correct  or  swear  off  — in  placing  the  sums 
opposite  each  individual  name."  ^  An  enormous  pro- 
portion of  the  assessments  so  made  are  sworn  off. 
The  figures  on  the  following  page  show  for  certain 

^  Testimony  of  Tax  Commissioner  Coleman  before  the  (Fassett) 
Committee  on  Cities,  Senate  Documents,  189 1,  No.  80,  p.  2351. 


THE  ASSESSMENT   OF  PROPERTY 


193 


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194  THE   SYSTEM   OF   TAXATION 

years  the  results  of  this  process.^  The  assess- 
ments of  shareholders  of  banks  are  omitted,  there 
being  little  opportunity  for  evasion  here. 

These  enormous  reductions  in  personal  assess- 
ments contrast  markedly  with  those  in  the  real 
estate  lists,  where  out  of  161,402  pieces  assessed 
in  1889  applications  for  reduction  were  made  as  to 
only  559.  Certainly  it  is  remarkable  that  out  of 
the  population  of  nearly  two  millions  that  New 
York  now  boasts,  only  21,732  persons  should  be 
found  with  personal  property  subject  to  taxation. 
It  is,  moreover,  the  wealthiest  citizens  who  most 
largely  escape  their  just  burdens.  "We  only  catch 
the  widows  and  the  orphans,"  said  Tax  Commis- 
sioner Coleman  in  1891,^  since  their  property  can 
be  ascertained  from  the  surrogate's  office.  After 
the  death  of  William  H.  Vanderbilt  several  years 
ago,  it  was  found  that  perhaps  ^40,000,000  of  his 
personal  estate  was  taxable,  —  he  had  been  paying 
during  his  lifetime  on  ^500,000, — but  the  heirs 
threatened  to  convert  the  property  into  non-taxable 
securities  if  the  full  amount  were  assessed,  and 
the  city  officers  counted  themselves  exceedingly 
fortunate  to  make  a  compromise  by  which  the 
estate  paid  taxes  on  $8,000,000^ — a  sum  which, 
added  to  the  separate  assessments  of  the  various 
members  of  the  family,  made  the  Vanderbilts  pay 

1  Quarterly  Report  Commissioners  of  Taxes  and  Assessments, 
City  Record,  1889,  pp.  3233,  3234;    1896,  p.  2569. 

-  Fassett  Committee's  Report,  p.  2238.      ^  Ibid.,  pp.  2354-2363. 


THE   ASSESSMENT   OF  PROPERTY  195 

about  one-thirteenth  of  the  resident  personal  taxes 
of  New  York.  Many  men  of  wealth  move  their 
residences  to  some  of  the  suburbs  to  escape  assess- 
ment, and  many  others  by  threatening  to  do  so 
keep  their  taxes  down  as  the  result  of  a  sort  of 
bargain  with  the  city.  So  complete  a  failure  is 
the  assessment  of  personal  property  that  many 
thoughtful  citizens  have  advocated  the  entire  ex- 
emption of  personalty  from  local  taxation,  trusting 
to  state  taxes  on  corporations,  inheritances,  etc., 
to  reach  this  class  of  wealth.  The  problem  of 
securing  equitable  taxation  is  certainly  a  pressing 
one,  not  only  in  New  York  city,  but  in  other  cities 
and  in  other  states.  Great  as  is  the  evasion  of 
personal  taxes  in  New  York,  in  Brooklyn,  where 
personalty  pays  barely  three  per  cent  of  the  entire 
amount  of  taxes,  it  must  be  even  greater. 

Real  estate,  of  course,  cannot  escape  assessment 
altogether  unless  it  is  exempt  by  law ;  but  the 
charge  is  often  made  that  there  is  material  inequal- 
ity in  the  valuations  as  between  individuals  and 
localities.  Districts  inhabited  by  small  taxpayers, 
and  those  where  real  estate  transfers  are  least 
numerous,  are,  it  is  declared,  rated  too  high  in  pro- 
portion. On  the  other  hand,  large  blocks  of  un- 
improved property  held  for  speculation  are  often 
assessed  very  far  below  their  real  worth.  The  tax 
commissioners  themselves^  admit  that  injustice  is 
often  done,  but  they  tell  us  that  they  can  exercise 

^  Fassett  Committee's  Report,  pp.  2197  ff. 


196  THE   SYSTEM   OF   TAXATION 

little  real  control  over  the  general  plan  of  assess- 
ment which  their  deputies  may  individually  follow, 
consciously  or  unconsciously.  As  each  deputy 
has  exclusively  the  assessment  of  his  assigned  dis- 
trict, the  personal  equation  cannot  fail  to  enter 
largely.  Unfortunately  the  new  charter  makes  no 
provision  to  secure  more  deliberative  action  in 
equalizing  valuations  between  districts,  or  other- 
wise to  improve  the  assessment  system. 

The  gross  assessed  valuation  of  real  estate  in 
the  metropolis,  according  to  the  almost  universal 
custom,  is  considerably  less  than  the  true  value. 
One  motive  which  leads  to  this  undervaluation  is 
the  desire  to  make  the  burden  of  state  taxes  upon 
the  county  relatively  as  light  as  possible.  The 
same  motive,  of  course,  influences  the  action  of  as- 
sessors throughout  the  state  ;  hence  arises  the 
need  for  an  equalization  between  the  assessments 
of  the  various  counties  for  the  purpose  of  appor- 
tioning state  taxes.  Instead  of  making  an  entirely 
new  assessment  for  this  purpose,  the  state  asses- 
sors, by  taking  a  considerable  number  of  typical 
cases,  endeavor  to  estimate  the  average  proportion 
of  assessed  to  true  valuation  of  real  estate  (there 
is  no  equalization  of  personal  property)  in  each 
county  ;  they  then  add  to  or  subtract  from  the 
local  assessments  such  a  percentage  as  will  make 
this  proportion  uniform  in  the  state.  In  the  opin- 
ion of  this  state  board,  the  valuations  of  realty  made 
by  New  York  city  officials  are  about  65  per  cent 


THE  ASSESSMENT   OF  PROPERTY  1 97 

of  the  true  value,  and  are  somewhat  less  propor- 
tionally than  the  average  valuations  of  the  other 
counties.  Accordingly,  in  apportioning  the  state 
tax,  they  have  regularly  for  the  past  two  decades 
increased  considerably  the  local  assessment  —  on 
the  average  nearly  a  tenth  having  been  added. 
The  proportion  of  increase  has,  however,  been 
somewhat  less  since  1890  than  before.  In  1881 
the  local  valuation  of  realty  was  $976,735,199, 
the  increase  by  the  state  officials  no  less  than 
$  1 26,829, 509  ;i  while  in  1895  only  $70,458,738  was 
added  to  the  original  assessment  of  over  sixteen 
hundred  millions.^  Despite  the  fact  that  by  this 
action  of  the  state  assessors  the  metropolis  is 
made  to  pay  more  than  45  per  cent  of  the  state 
taxes,^  this  probably  indicates  much  less  discrimi- 
nation against  the  city  than  many  New  York  citi- 
zens are  wont  to  charge.  The  people  of  the  rural 
districts  are  quite  as  strongly  convinced  that  it  is 
they  who  suffer  injustice. 

It  is  not  infrequently  declared  by  newspapers  and 
others  that  the  city  authorities  at  times  attempt  to 
blind  the  taxpayers  as  to  actual  increase  of  public 
expenditures  by  unduly  swelling  the  assessed  valu- 
ation, and  thus  keeping  down  the  tax-rate.  This, 
however,  is  quite  doubtful.     The  device  is  almost 

^  Mayor's  Message,  City  Record,  1892,  p.  21. 
2  Report  of  State  Assessors,  1895,  p.  18. 

•^  Ibid.^  p.  8.  45.966  per  cent  for  1895.  There  has  been  little 
change  for  twenty  years. 


198  THE   SYSTEM   OF   TAXATION 

too  transparent  to  be  effective.  The  approximate 
equality  of  the  annual  increases  in  assessments 
also  argues  against  this  charge.  Moreover,  as  we 
have  seen,  the  desire  to  lighten  the  city's  burden 
of  state  taxes  is  a  motive  always  tending  to  keep 
down  local  assessments.  The  study  given  by  the 
state  board  of  assessors  to  the  valuations  is  scarcely 
so  thorough  but  that  any  undue  addition  to  the 
assessments  by  the  city  officers  would  be  apt  to 
lead  to  a  somewhat  proportionate  increase  in  the 
state  valuation.  Although  the  assessment  of  New 
York  city  has  nearly  doubled  since  1879,  ^^^  ^^ 
probably  hardly  more  than  proportional  to  the  real 
growth  in  values. 

§  37.    Collection  of  Taxes. 

Under  the  present  system,  taxes  have  usually 
been  collected  quite  completely.  There  have 
been  no  deficiencies  necessitating  the  issue  of 
funding  bonds,  such  as  occurred  in  the  earlier 
days.  This  may  be  judged  from  the  fact  that  the 
total  amount  of  taxes  collected  for  the  period  of 
twenty-two  years  ending  1895,  counting  interest, 
has  come  within  a  shade  of  equalling  the  amount  of 
taxes  levied.^     Although,  on  account  of  the  longer 

1  Taxes  levied ;J  700,965,113 

Collected  by  receiver  of  taxes  .  .  .  $  624,499,994 
Collected  by  clerk  of  arrears       .     .     .        62,715,611 

^687,215,605 
Interest  on  taxes 12,973,560 

Total  collected ^700,189,166 

Comp.  Rep.,  1S95,  PP-  ^7^'  '^°- 


COLLECTION   OF   TAXES 


199 


period  that  must  elapse  before  real  estate  taxes 
can  be  enforced  by  sale,  there  is  a  considerably 
larger  amount  of  these  unpaid  for  the  more  recent 
years,  they  are  ultimately  collected  much  more 
fully  than  personal  taxes.  Indeed,  if  we  go  back 
eight  or  ten  years,  the  amount  of  uncollected  real 
estate  taxes  is  barely  a  tenth  of  that  of  unpaid 
personal  taxes,  notwithstanding  that  the  real  taxes 
originally  levied  are  so  much  the  greater.  About 
85  per  cent  of  the  annual  taxes  have  in  recent 
years  been  collected  before  the  close  of  the  year, 
although  the  proportion  varies  considerably  with 
different  conditions.  This  greater  promptness  in 
collection  has  contributed  to  the  noteworthy  reduc- 
tion in  the  amount  of  revenue  bonds  outstanding 
at  the  end  of  the  year  and  to  the  reduction  in  the 
sum  spent  for  interest  on  such  bonds.  For  1896 
the  taxes  were  collected  even  more  promptly  than 
usual ;  and  the  amount  of  revenue  bonds,  for  the 
first  time  in  over  thirty  years,  was  reduced  to  zero 
on  December  31,^  except  for  certain  bonds  not 
intended  to  be  paid  by  the  taxes  of  that  year.  A 
change  has  been  frequently  urged  by  city  offi- 
cers and  others,  by  which  the  collection  of  taxes 
should  take  place  much  earlier  in  the  year  for 
whose  expenditures  they  are  intended,^  or  in  the 
preceding  year,  in  order  to  avoid  borrowing  money 

1  Manuscript  records  in  comptroller's  office. 

^  Comptroller  Myers  urged  the  change  strongly  in  his  report  of 
1892,  p.  64. 


20O  THE    SYSTEM   OF   TAXATION 

for  current  outlay  during  so  great  a  part  of  the 
time.  The  cxpensiveness  of  the  present  system 
is  pointed  out  by  the  advocates  of  this  modifica- 
tion. The  amount  of  interest  paid  on  revenue 
bonds  for  twenty-two  years,  ending  1895,  was 
$8,045,719,  the  income  from  interest  on  deposits 
only  $2,076,906,  the  difference  representing  a  loss 
to  the  city  of  about  $275,000  yearly.^  In  Brook- 
lyn and  in  other  cities  taxes  for  the  current  year 
are  collected  in  the  year  preceding ;  but  notwith- 
standing this  example,  the  new  charter  proposes 
no  change  from  the  present  practice.  If  such  a 
change  were  attempted,  it  would  doubtless  have 
to  be  made  gradually,  perhaps  by  pushing  back 
the  date  when  taxes  should  be  due  one  or  two 
months  each  year,  in  order  that  an  altogether  ex- 
traordinary burden  might  not  be  placed  on  the 
taxpayers  at  the  time  of  the  change.^ 

1  Comp.  Rep.,  1895,  P-  i^'- 

^  A  further  change  in  the  tax  system  that  might  be  suggested 
is  the  abandonment  of  the  practice  of  adding  a  percentage  to  the 
levy  for  deficiencies.  The  amount  of  interest  on  taxes  collected  has 
been  for  many  years  approximately  equal  to  that  of  these  additions. 
There  is,  perhaps,  some  advantage  in  the  way  of  clearness  in  the 
present  practice  of  distinguishing  interest  on  taxes  from  taxes  col- 
lected, and  turning  the  former  into  the  general  fund.  Otherwise 
the  two  might  be  grouped  together  as  tax  income,  and  the  addition 
for  deficiencies  simply  dropped.  This  would  amount  to  the  same 
thing  practically  as  the  present  arrangement,  since  the  estimated 
receipts  of  the  general  fund,  including  interest  on  taxes,  are  now 
subtracted  from  the  levy. 


CHAPTER   VIII 

SPECIAL    ASSESSMENTS 

Next  to  general  taxes,  New  York's  most  impor- 
tant source  of  revenue,  although  it  does  not  enter 
into  the  regular  budget  account,  is  from  special  as- 
sessments for  local  improvements.  Perhaps  more 
than  any  other  branch  of  the  finances  this  system 
has  given  rise  in  the  past  to  difficulties  and  abuses  ; 
but  it  has  been  materially  improved  and  simplified 
since  the  Tweed  Ring,  and  while  the  methods  are 
still  complex  and  inconsistent,  the  practical  work- 
ing of  late  years  has  been  fairly  satisfactory.  It 
is  to  be  feared  that  the  somewhat  important 
changes  proposed  by  the  charter  of  1897  will  not 
greatly  improve  the  system. 

The  distinction  (which  will  be  more  fully  ex- 
plained in  section  39)  between  assessments  for 
'street  openings'  and  for  'local  or  street  improve- 
ments' respectively,  must  be  borne  in  mind. 

§  38.    Changes  in  the  Assessment  System. 

Since  the  Ring  days  some  changes  in  the  law 
have  been  made  regarding  the  authority  to  inaugu- 
rate and  carry  on  assessment  undertakings.     From 

20 1 


202  SPECIAL   ASSESSMENTS 

the  institution  of  the  system  to  the  present  time 
it  has  required  an  ordinance  of  the  common  council 
to  authorize  those  of  the  second  class, — street 
improvements,  —  though  their  conduct,  and  the 
details  of  the  assessments,  are  at  present  left  to 
executive  officers.  The  theory  on  which  this 
power  regarding  street  improvements  has  been 
retained  in  spite  of  the  general  weakening  of  the 
council  is  apparently  that  their  authorization  im- 
plies a  form  of  tax  levying,  and  to  impose  taxes  is 
considered  a  prerogative  of  the  council.^  In  prac- 
tice the  action  of  that  body  has  of  late  years  been 
somewhat  perfunctory.  Up  to  1865  the  first  au- 
thorization of  street  openings  also  belonged  in 
every  case  to  the  council,  but  in  that  year^  its 
powers  as  to  streets  above  155th  were  transferred 
to  the  Central  Park  commission,  a  change  which 
may  doubtless  be  explained,  although  hardly  justi- 
fied, by  the  fact  that  the  same  law  had  empowered 
the  commission  to  open  and  improve  the  Boule- 
vard,—  park  authorities  often  being  given  charge 
of  boulevards  and  driveways.  The  department  of 
parks,  which  succeeded  the  Central  Park  commis- 
sion, was  given  authority  also  over  street  openings 
in  the  23d  and  24th  wards,  after  their  annexation. 
Meantime,  by  the  charter  of  1870  and  amendments 
of  1 87 1,  the  right  to  regulate  street  openings  below 
59th  Street  was  bestowed  on  a  'board  of   street 

1  See  Matter  of  Roberts,  8i  N.  Y.  62, 

2  Laws,  1865,  Chap.  565. 


CHANGES  IN  ASSESSMENT  SYSTEM        203 

opening  and  improvement,'  consisting  of  the  mayor, 
comptroller,  commissioner  of  public  works,  presi- 
dent of  the  park  department,  and  president  of  the 
board  of  aldermen.^  The  charter  of  1873^  took 
away  from  the  council  its  last  vestige  of  power  in 
regard  to  street  openings,  giving  to  the  commis- 
sioner of  public  works  the  entire  control  of  these 
enterprises  from  59th  to  155th  Street.  This 
triple  division  of  authority  lasted  till,  in  1885,^  the 
impropriety  of  leaving  this  power  as  regards  so  large 
a  part  of  the  city  to  a  single  executive  officer,  —  the 
work  of  whose  department  in  improving  streets 
would  be,  moreover,  largely  affected  by  his  decision 
as  to  opening  them,  —  led  to  the  transfer  of  all 
powers  of  the  commissioner  of  public  works  in  this 
respect  to  the  board  of  street  opening  and  im- 
provement. In  1890,  furthermore,  the  powers  of 
the  park  department  as  to  streets  were  given  over 
to  a  commissioner  of  street  improvements  for  the 
23d  and  24th  wards,  whose  action  as  to  openings  is 
subject  to  the  board  of  street  opening,  which  thus 
at  last  has  obtained  exclusive  control  of  these 
enterprises. 

The  Greater  New  York  charter  has  made  im- 
portant changes  regarding  the  authority  to  inaug- 
urate both  classes  of  assessment  enterprises.  The 
aim  has  been  to  grant  more  home  rule  to  the  dis- 

1  Laws,  1870,  Chap.  383,  §  30;    1871,  Chap.  574,  §  18. 

2  Ibid.,  1873,  Chap.  335,  §  73. 
^  Ibid.,  1885,  Chap.  185. 


204  SPECIAL   ASSESSMENTS 

tricts  specially  affected,  and  at  the  same  time  to 
make  the  system  more  secure  and  to  establish 
additional  checks  and  balances.  Hereafter  each 
of  the  twenty-two  state  senatorial  districts  em- 
braced in  the  greater  city  is  to  have  a  board  of 
local  improvements,  to  be  composed  of  the  presi- 
dent of  the  borough  in  which  the  district  may  be 
situated  and  of  the  members  of  each  house  of  the 
municipal  assembly  elected  from  the  district,  — 
the  board  thus  containing  either  four  or  five 
members.  No  street  enterprise  affecting  only  a 
particular  district  can  be  inaugurated  except  upon 
the  initiative  of  the  district  board,  and  where  two 
or  more  districts  are  affected,  their  local  boards 
must  jointly  approve.  The  effect  of  such  a  rec- 
ommendation is  to  bring  the  enterprise  before  the 
general  '  board  of  public  improvements '  instituted 
by  the  new  law,  which  consists  of  a  president  of 
the  board,  the  heads  of  the  six  departments  con- 
cerned with  public  works,  the  mayor,  comptroller, 
corporation  counsel,  and  the  president  of  the  bor- 
ough affected  by  the  work.  To  this  powerful  body 
will  belong  all  the  prerogatives  now  possessed  by 
the  board  of  street  opening  and  improvements, 
with  still  added  authority.  By  a  provision  designed 
to  secure  more  careful  consideration  and  economy, 
an  estimate  of  the  cost  of  the  proposed  work,  and 
a  statement  of  the  assessed  value  of  the  real  estate 
included  within  the  probable  area  of  assessment, 
must  be  submitted  to  the  board  before  its  action. 


CHANGES  IN  ASSESSMENT  SYSTEM        205 

The  resolution  of  the  board  of  public  improve- 
ments favoring  any  enterprise  has  still  to  be  sub- 
mitted to  the  municipal  assembly  ;  and,  in  turn, 
any  measure  introduced  into  the  assembly  in  favor 
of  a  public  v^ork  must,  before  final  action,  be  sub- 
mitted to  the  approval  of  the  smaller  board,  failing 
which  only  a  five-sixths  vote  of  the  assembly  can 
carry  it  into  effect.  The  board  of  public  improve- 
ments is  authorized  to  frame  general  ordinances 
regulating  the  methods  of  conducting  public  works, 
which  can  be  approved  or  rejected  but  not  amended 
by  the  municipal  assembly. 

It  seems  to  be  the  opinion  of  many  that  this  new 
manner  of  regulating  improvements  is  too  compli- 
cated, and  presents  too  many  mutually  restrictive 
bodies  to  work  smoothly.  There  is  danger  of  dead- 
lock, and  to  fix  responsibility  will  be  almost  im- 
possible. Had  the  district  and  general  boards 
been  given  merely  advisory  power,  and,  if  local 
autonomy  was  desired,  had  some  provision  been 
made  for  direct  approval  or  disapproval  by  the 
people  affected,  the  system  would  probably  have 
been  more  satisfactory. 

Other  changes  of  importance  have  been  made 
since  the  Ring  period  as  to  the  financial  manage- 
ment of  the  assessment  system.  The  law  of  1869, 
allowing  the  special  commissioners  of  estimate  in 
each  street-opening  proceeding  to  decide  that  any 
part  not  exceeding  one-half  of  the  cost  might  be 
charged    upon    the    city  as  a  whole,  remained    in 


206  SPECIAL   ASSESSMENTS 

force  for  some  years  after  the  fall  of  the  Tweed 
Ring,  and  continued  to  add  largely  to  the  city 
debt,  while  encouraging  extravagant  and  prema- 
ture enterprises.  By  the  end  of  1875,  more  than 
eight  and  a  half  millions  of  '  city  improvement 
stock '  had  been  issued  under  this  law.^  Though 
the  abuse  had  been  checked  during  that  year, 
it  might  begin  again  at  any  time  so  long  as  the 
statute  remained  in  force;  in  1876,  accordingly, 
it  was  repealed,  and  the  option  to  make  part  of  the 
cost  of  such  enterprises  a  general  charge  was  trans- 
ferred to  the  board  of  street  opening  and  improve- 
ment.^  The  latter  body  has  seldom  made  use  of 
this  authority,  except  in  the  case  of  the  small  parks 
recently  opened,  a  part  of  whose  cost,  determined 
by  the  board,  has  been  levied  upon  the  property 
benefited.  A  law  of  1874,^  however,  is  still  in 
force,  providing  that  in  the  23d  and  24th  wards 
the  cost  of  opening  streets  over  a  mile  long  must 
be  divided  equally  between  the  abutting  owners 
and  the  city  as  a  whole.  Up  to  1884,  less  than 
a  million  of  bonds  had  been  issued  under  these 
two  provisions  to  cover  the  city's  proportion  of 
street-opening  expenses.*  Since  then,  burdens  thus 
thrown  on  the  general  treasury  have  usually  been 

1  Comp.  Rep.,  1883,  p.  48,  table. 

2  Laws,  1876,  Chap.  210. 
■^  Ibid.,  1874,  Chap.  604. 

■*  ^893,371.  Comp.  Rep.,  1884,  p.  64,  —  city  improvement, 
consolidated  L  and  M  stocks.  Compare  Comp.  Rep.,  1895, 
.Statement  D. 


CHANGES   IN  ASSESSMENT   SYSTEM        20/ 

paid  from  appropriations,  either  directly  or  by  the 
intervention  of  special  revenue  bonds. 

Exceedingly  heavy  losses  have  fallen  upon  the 
city  from  the  vacation  of  assessments  by  the  courts 
and  from  failure  to  collect  them  on  other  grounds. 
These  difficulties  belong  chiefly  to  street  improve- 
ments, and  only  to  a  much  less  degree  to  open- 
ings, for  the  obvious  reason  that  by  far  the  greater 
part  of  the  cost  of  lands  taken  in  the  latter  pro- 
ceedings is  charged  back  upon  the  very  persons  to 
whom  damages  are  aw^arded,  so  that  the  transac- 
tion practically  amounts  to  the  payment  of  small 
balances  on  one  side  or  the  other.  Even  after  the 
expulsion  of  Tweed  from  the  position  of  commis- 
sioner of  public  works,  that  commissioner,  under 
whom  a  very  large  part  of  street  improvements 
are  carried  on,  remained  subject  to  no  control 
except  that  of  the  city  council,  which  was  always 
ready  to  authorize  expenditure  ;  and  Tweed's  im- 
mediate successor  himself  was  far  from  economi- 
cal.^ Many  undertakings,  indeed,  already  begun 
under  the  Ring,  had  necessarily  to  be  completed, 
but  many  new  ones  also  were  commenced.  The 
expenditures  for  local  improvements  continued  to 
average  over  three  millions  yearly  from  1872  to 
1876,  while  the  amount  of  unpaid  assessment  bonds 
rose  rapidly.  Vacations,  not  only  of  assessments 
made  under  the  former  regime,  but  of  newly  con- 
firmed lists,  were  very  extensive.     They  amounted 

^  See  Mayor  Ilavemeyer's  Message,  Cily  Record,  1874,  p.  62. 


208  SPECIAL  ASSESSMENTS 

to  nearly  a  million  annually  in  1872  and  1873. 
While  these  vacations  were  often  on  account  of 
just  complaints  of  overcharge  and  poor  work,  many 
were  still,  as  during  the  Ring  period,  on  trivial 
grounds.  Attempts  to  secure  reforms  in  the  laws, 
under  which  this  was  possible,  "  encountered  at 
Albany  the  organized  opposition  of  a  knot  of 
lawyers,"  who  drew  large  profits  by  aiding  in  these 
raids  on  the  city  treasury.^  Finally,  in  1874,^  acts 
were  passed  removing  '  legal  irregularity '  as  a 
ground  for  vacating  assessments,  and  leaving  only 
fraud  and  overcharge  as  such  grounds.  In  1880^ 
it  was  further  enacted  that  no  assessment  should 
be  reduced,  except  "to  the  extent  that  the  same 
may  be  shown,  by  parties  complaining  thereof,  to 
have  been  in  fact  increased  in  dollars  and  cents 
by  reason  of  fraud  or  substantial  error  ;  and  in  no 
event  shall  that  proportion  of  any  such  assessment 
which  is  equivalent  to  the  fair  value  of  any  actual 
local  improvement  be  disturbed  for  any  cause." 
All  these  restrictive  provisions  remain  in  force 
under  the  charter  of  1897. 

Meantime  legislation  had  been  necessary  to  ad- 
just the  heavy  burdens  that  had  fallen  on  the  city 
from  vacations  and  non-collection  of  assessments. 

1  Ante,  p.  144.  Mayor's  Message,  City  Record,  1874,  p.  64. 
Communication  from  Comptroller  of  City  of  New  York,  New  York 
Senate  Documents,  1873,  No.  105. 

2  Laws,  1874,  Chaps.  312,  313. 

3  Ibid.,  1880,  Chap.  550. 


CHANGES  I.V  ASSESSMENT  SYSTEM        209 

Although  part  of  these  losses  had  already  been 
funded  from  time  to  time  by  consolidated  stock, 
the  city  was  still,  in  1878,  paying  interest  at  six 
and  seven  per  cent  on  more  than  twenty  millions 
of  assessment  bonds,  nearly  all  issued  for  street 
improvements  alone.  Fully  half  of  these  bonds  had 
been  issued  even  before  1874,^  and  there  was  little 
likelihood  that  further  collections  to  any  consider- 
able extent  would  be  made  for  redeeming  them. 
Accordingly,  by  the  general  debt  act  of  1878,'^  one 
of  whose  chief  objects  was  the  disposition  of  this 
immense  floating  indebtedness,  1^10,204,745  of 
assessment  bonds  were  funded  by  the  issue  of  con- 
solidated stock  ;^  while  all  the  rest  of  the  existing 
assessment  debt  was  made  redeemable  from  the 
sinking  fund,  to  which  assessments  on  works 
begun  before  the  date  of  the  law  were  to  be 
turned  over,  —  a  provision  extended  by  an  act  of 
1880*  to  all  bonds  for  enterprises  commenced 
before  that  time.  The  more  than  twelve  millions 
of  bonds  thus  charged  on  the  sinking  fund  were 
all  paid  off  by  1884.^  The  act  of  1880  had  also 
established  a  special  'assessment  commission'  to 

1  Comp.  (August)  Rep.,  City  Record,  1878,  p.  1296.  The  'street 
improvement,'  'Central  Park  commission,'  and  a  considerable  part 
of  the  '  department  of  parks '  bonds  had  all  been  issued  before  1873, 
as  had  a  large  amount  of  '  assessment  bonds.' 

2  Laws,  1878,  Chap.  383. 

^  Cily  Record,  1879,  p.  1342;    Comp.  Rep.,  1 880,  p.  15. 
*  Laws,  1880,  Chap.  550. 
^  Comp.  Rep.,  from  year  to  year. 
P 


210  SPECIAL   ASSESSMENTS 

adjust  claims  still  unsettled  as  to  prior  enterprises, 
and  fully  three  millions  of  assessments  were  vacated 
or  reduced  by  this  body  during  the  half  decade 
over  which  its  work  stretched.  It  seems  probable 
from  its  personnel  that  most  of  these  great  remis- 
sions were  only  such  as  justice  required.  Collec- 
tions on  these  old  assessments  have  dragged  on 
slowly,  but  at  last  practically  the  full  amount  not 
covered  by  the  funding  bonds  has  been  collected. 
Of  late  years,  under  the  more  rigid  laws,  and  espe- 
cially by  means  of  more  rigid  administration,  losses 
to  the  city  from  the  assessment  system  have  been 
reduced  almost  to  a  minimum.  Though  city  offi- 
cers sometimes  charge  that  assessments  are  still 
being  set  aside  by  the  courts  for  improper  grounds, 
the  amount  of  remissions  has  become  so  small 
that  this  charge  is  questionable.^  Only  $17,031 
of  assessments  were  vacated  in  1896.  While,  with 
the    considerable    increase    in    street    enterprises 

1  The  following  are  the  vacations  since  1880  by  the  assessment 
commission  and  the  courts  :  — 

880 $  739,301     1889 $  16,084 

881 957>557    1890 (Unknown) 

882 890,150    1891 " 

883 256,324'  1892 ^22,640 

884 261,010  1893 73.794 

885 166,270 1  1894 39.297 

886 544,451  1895 26,481 

887 261,687  1896 17.031 


88 28,941 

Fassett  Committee  Report,  p.  2482;   Comp.  Rep.,  1892-96. 


CHANGES   IN  ASSESSMENT   SYSTEM        211 

since  1890,  the  amount  of  outstanding  bonds  and 
of  unpaid  assessments  has  grown  considerably, 
but  Httle  loss  is  likely  to  be  incurred.  Of  the 
^8,916,068  of  uncollected  assessments  at  the  close 
of  1896,  more  than  three  millions  are  upon  property 
owned  by  the  city,  which,  by  neglect  of  the  finan- 
cial officers,  have  not  been  charged  off  for  many 
years. 

The  constitutional  amendment  of  1884,  limiting 
city  indebtedness,  applied  to  assessment  bonds, 
and  throughout  1885  this  amendment  was  so  in- 
terpreted as  to  prevent  New  York  from  borrowing 
any  money  except  for  water  purposes.  Some  new 
provision  regarding  the  assessment  system  was 
accordingly  necessary,  and  laws  ^  were  secured 
establishing  a  '  fund  for  street  and  park  open- 
ings,' and  a  'fund  for  local  improvements.'  To 
replenish  the  latter  fund  it  was  provided  that  at 
the  time  of  voting  the  annual  appropriations,  in 
case  it  appeared  that  the  expense  of  street  im- 
provements then  contracted  for,  and  of  such  as  the 
board  of  estimate  and  apportionment  should  "deem 
it  necessary  or  desirable  to  undertake  in  such  en- 
suing year,"  would  be  greater  than  the  amount 
of  assessment  moneys  on  hand,  or  likely  to  be 
collected  during  the  year,  the  board  should  ap- 
propriate a  sufficient  sum  from  the  regular  budget 
to  cover  the  estimated  deficiency.  No  contract 
for  such  improvements  should  be  binding  unless  a 

^  Laws,  1S85,  Chaps.  173,  174. 


212  SPECIAL   ASSESSMENTS 

certificate  of  the  comptroller  were  obtained  that 
there  was  already  in  the  fund  cash  enough  to  pay 
the  cost.  The  law  establishing  the  fund  for  local 
improvements  was  repealed  in  1886,^  as  soon  as 
the  decision  of  the  courts  made  it  possible  again 
to  issue  assessment  bonds.  The  repeal  was 
strongly  opposed  by  the  board  of  estimate  and 
the  comptroller,  who  maintained,^  not  without 
justice,  that  the  act  had  operated  "to  reform 
financial  difficulties  arising  from  conflicting  and 
loosely  adjusted  provisions  of  law,"  and  had  placed 
important  checks  on  extravagance. 

The  fund  for  street  and  park  openings,  estab- 
lished by  the  law  of  1885,  still  persists,  though  the 
act,  which  originally  was  quite  similar  in  general 
nature  to  the  law  concerning  the  improvement 
fund,  —  except  that  it  gave  less  control  to  the  board 
of  estimate  and  apportionment,  —  has  had  two  im- 
portant amendments.  By  the  first  of  these  ^  it 
was  made  possible  to  issue  special  revenue  bonds, 
payable  in  the  ensuing  year,  whenever  the  accumu- 
lations in  the  fund  from  special  assessments  or 
from  appropriations  should  be  insufficient  to  cover 
the  damages  awarded.  In  1895,*  moreover,  it  was 
enacted  that  any  deficiency  which  results  from 
charging  part  of  the  cost  of  opening  streets  and 

1  Laws,  1886,  Chap.  680. 

2  Letter  to  the  governor,  City  Record,  1886,  p.  1417. 
•''  Laws,  1888,  Chap.  222. 

4  Ibid.,  1895,  Chap.  684. 


ASSESSMENT  PROCEDURE  213 

parks  upon  the  city  as  a  whole,  may  be  met  by 
consolidated  stock.  Nearly  $800,000  of  bonds 
were  issued  in  i8g6  under  this  latter  provision.^ 

A  minor  disadvantage  that  has  grown  out  of  the 
numerous  changes,  during  the  past  twenty  years, 
in  the  laws  governing  assessments,  is  that  there 
has  been  and  still  is  a  very  considerable  complica- 
tion of  the  accounts,  which  renders  it  difificult  to 
learn  the  actual  receipts  and  payments  on  assess- 
ment enterprises  and  the  state  of  the  finances  con- 
cerning them. 

§  39.    Assessment  Procedure. 

Having  sketched  these  changes  in  the  law  since 
1 87 1,  we  may  turn  to  a  fuller  description  of  the 
present  procedure.^  The  first  class  of  assessment 
enterprises,  whose  distinguishing  feature  is  the 
appropriation  of  private  property  for  public  use, 
includes  not  merely  the  opening  of  streets  and 
avenues,  in  whole  or  in  part,  but  their  extension, 
widening,  straightening,  etc.,  and  likewise  the 
opening  or  altering  of  parks  and  public  places. 
There  are  at  present  two  different  ways  of  inau- 
gurating such  an  undertaking,  although,  as  we 
have  seen,  there  will  be  a  change  under  the  new 
charter.  It  must  be  begun  whenever  the  owners 
of  three-fourths  of  the  land  facing  the  proposed 
street  or  place  petition  for  the  improvement ;  or 
it  may  be  ordered  without  their  petition  or  consent 

1  City  Record,  1897,  p.  96. 

2  Consolidatiuii  Act,  §§  865-914,  955-1008. 


214  SPECIAL   ASSESSMENTS 

by  the  board  of  street  opening  and  improvement 
(the  mayor,  comptroller,  commissioner  of  public 
works,  president  of  the  department  of  public 
parks,  and  president  of  the  aldermen).  In  either 
case  application  is  made  to  the  supreme  court  of 
the  judicial  district  for  the  appointment  of  three 
'commissioners  of  estimate  and  assessment,'  no- 
tice of  the  application  having  been  first  published 
in  the  City  Record  and  in  four  other  newspapers, 
and  posted  at  the  site  of  the  proposed  improve- 
ment. The  city  authorities  may  nominate  three 
persons  as  commissioners ;  one  of  them  they  may 
specially  designate  and  he  must  be  chosen.  Prop- 
erty owners  interested  may  each  make  a  nomina- 
tion, and  if  they  can  all  agree  on  one  person  he 
must  be  appointed ;  otherwise,  the  court  selects 
one  commissioner  from  those  so  proposed,  and  then 
names  the  third  from  among  the  entire  number 
of  nominees  by  the  city  and  the  property  owners. 

These  commissioners  view  the  lands  and  assess 
separately  the  loss  and  the  benefit  to  each  owner 
through  the  change  made,  considering  the  effect 
of  change  of  grade  upon  the  lots,  etc.  With 
regard  to  certain  streets  above  59th  in  every 
case,  and  with  regard  to  all  streets  laid  down  on 
any  legally  authorized  map  of  the  city  in  case  no 
buildings  are  taken,  the  assessments  for  benefit 
may  not  extend  beyond  half-way  to  the  next 
street.  The  assessment,  moreover,  must  never 
exceed  one-half  the  taxable  valuation  of  the  prop- 


ASSESSMENT  PROCEDURE  21  5 

erty.  Subject  to  these  limitations,  the  board  of 
street  opening  determines  what  proportion,  if 
any,  of  the  expense  of  the  opening  or  alteration 
shall  be  charged  to  the  city ;  in  practice  the  board 
usually  levies  the  entire  cost  on  the  property.  Hav- 
ing made  their  awards  and  assessments,  the  com- 
missioners deposit  a  list  of  them  for  thirty  days 
with  the  department  of  public  works,  where  prop- 
erty owners  may  consult  it  and  present  objections 
in  writing  or  in  person.  Not  less  than  ten  days 
after  this  the  report,  with  such  amendments  as 
the  commissioners  see  fit  to  make,  is  presented 
to  the  supreme  court  for  confirmation.  If  now, 
at  this  late  stage,  the  persons  interested  in  a 
majority  of  the  awards  or  assessments  object  to 
further  proceedings,  the  entire  enterprise  must 
be  discontinued  —  an  important  safeguard  against 
premature  undertakings  or  fraudulent  adjustment 
of  the  expense.  Individual  property  owners  may 
also  appear  in  court  and  petition  for  changes,  and 
if  the  court  believes  that  justice  so  requires,  it 
may  remand  the  report  to  the  same  or  to  new 
commissioners  for  revision.  On  the  final  confir- 
mation of  the  proceedings,  the  title  to  the  land 
affected  is  at  once  vested  in  the  city,  which  is 
allowed  four  months  in  which  to  pay  the  dam- 
ages. The  legal  costs  and  commissioners'  charges 
for  street  openings  were  formerly  very  large  and 
constituted  a  serious  abuse,  but  they  are  now  re- 
stricted by  close  and  specific  provisions  of  statute. 


2l6  SPECIAL   ASSESSMENTS 

The  other  class  of  assessment  enterprises  —  local 
improvements  —  includes  grading  streets,  laying 
pavements,  curbs,  sidewalks,  and  sewers,  and 
fencing  vacant  lots.  The  ordinance  of  the  coun- 
cil required  for  their  initiation  does  no  more  than 
specify  the  general  nature  of  the  work,  without 
limiting  the  expenditure,  much  less  fixing  the 
details.  There  is  no  provision  of  law,  such  as  is 
found  in  many  states,  that  on  petition  of  the 
property  owners  the  work  may  be  required,  nor 
is  their  consent  necessary.  When,  however,  a 
street  has  once  been  paved  by  special  assessment, 
it  may  not  be  repaved  at  the  expense  of  the  abut- 
ting property  owners,  unless  a  majority  of  them, 
who  also  hold  a  majority  of  the  front  feet,  petition. 

When  the  improvement  of  a  street  has  been 
ordered  by  the  council,  the  work  falls  under  the 
charge  of  the  department  of  public  works,  except 
in  the  23d  and  24th  wards,  where  it  is  managed 
by  a  special  commissioner.  The  work  is  almost 
invariably  done  by  contract,  and  as  in  the  case 
of  other  contracts,  the  comptroller  is  present  in 
person  or  by  representative  at  the  opening  of  bids 
by  the  department.  Payments  on  contracts  from 
time  to  time  are  made  out  of  the  proceeds  of 
'  assessment  bonds,'  which  are  later  redeemed 
from  moneys  collected  on  assessments.  These 
may  be  issued  for  any  term  not  exceeding  ten 
years,  but  as  a  matter  of  fact  are  usually  payable 
in  from   one  to  five  years,  the  date  of  maturity 


ASSESSMENT  PROCEDURE  21/ 

being  partly  suited  to  the  convenience  of  the  sink- 
ing fund,  which  takes  most  of  the  assessment  bonds 
as  investments. 

When  the  work  of  improving  a  street  is  com- 
pleted, the  department  in  charge  prepares  a  list 
and  diagram  of  the  lots  affected,  and  presents 
them  to  the  board  of  assessors,  with  a  certificate 
of  the  cost,  and  another  from  the  comptroller 
stating  the  amount  of  interest  on  the  various 
instalments  paid  to  contractors,  till  sixty  days  after 
the  date  of  the  certificate.  The  board  of  asses- 
sors,—  which  is  not  specially  chosen  for  each  un- 
dertaking, but  a  permanent  body  of  four  members 
appointed  by  the  commissioners  of  taxes  and  as- 
sessments,—  apportions  among  the  property  owners 
benefited  the  entire  cost  of  the  improvement, 
including  the  interest,  the  only  restriction  being 
that  the  assessment  shall  not  exceed  one-half  of 
the  taxable  value  of  the  property.  In  practice, 
the  assessment  district  is  usually  confined  to  the 
lots  half-way  to  the  next  street.  Having  made  the 
apportionment,  the  assessors  advertise  the  fact 
that  the  lists  are  open  to  inspection,  and  those 
interested  may  appear  and  remonstrate  within 
thirty  days,  after  which  the  assessments  are  trans- 
mitted to  the  '  board  of  revision  and  correction  of 
assessments' — the  comptroller,  corporation  coun- 
sel, and  recorder  ^  —  for  final  confirmation.     This 

1  Under  the  new  charter,  the  president  of  the  board  of  local 
improvements  will  replace  the  recorder. 


2l8  SPECIAL   ASSESSMENTS 

board  makes  changes,  usually,  only  when  objec- 
tions have  been  raised  before  the  assessors,  and 
then  only  when  taxpayers  appear  personally  to 
sustain  their  objections.  When  new  remonstrants 
appear  for  the  first  time  before  the  board  of  re- 
vision, it  generally  first  refers  their  claims  back  to 
the  board  of  assessors.  Remonstrances,  in  fact, 
are  made  regarding  a  considerable  proportion  of 
assessment  lists,  but  most  of  the  objections  are 
ordinarily  overruled. 

This  system  of  adjusting  assessments,  which  is 
practically  unchanged  under  the  new  charter,  is 
criticised  as  unduly  complicated.  Although,  on  ac- 
count of  the  need  of  condemning  private  property 
in  street-opening  proceedings,  it  may  be  neces- 
sary to  give  some  control  over  them  to  the  courts, 
it  seems  needless  to  make  such  a  complete  differ- 
ence between  the  procedure  here  and  that  for  street 
improvements.  The  assessment  of  damages  and 
benefits  might  be  made  primarily  by  the  same 
officers  who  apportion  the  benefits  from  street  im- 
provements, subject  to  approval  of  the  court,  which 
might,  if  it  saw  fit,  appoint  commissioners  to  re- 
view the  lands.  It  would  appear  more  logical 
also  that  the  revision  of  assessment  lists  for  street 
improvements  should  belong  to  the  regular  board 
of  taxes  and  assessments,  subject  to  advice  by 
the  comptroller  and  the  department  in  charge, 
rather  than  to  a  special  ex-officio  board.  In  other 
words,  this  particular  form  of  taxation  might  be 


ASSESSMENT  PROCEDURE  219 

brought  into  closer  relation  with  the  general  tax 
system. 

Certain  provisions  as  to  collection  apply  to  assess- 
ments for  openings  and  for  improvements  alike. 
They  are  payable,  not  to  the  receiver  of  taxes,  but 
to  a  special  bureau  of  the  finance  department 
charged  with  the  collection  of  assessments  and 
of  arrears  of  both  taxes  and  assessments.  If  not 
paid  within  sixty  days  after  confirmation,  they  bear 
interest  at  seven  per  cent.  There  is  no  provision 
for  deferred  payments  except  in  the  case  of  open- 
ings and  improvements  north  of  155th  Street  and 
in  the  23d  and  24th  wards,  where  by  a  law  of  1881  ^ 
assessments  may  be  paid  in  twenty  annual  instal- 
ments with  interest  at  seven  per  cent.  While  in 
many  cities  the  practice  of  deferring  assessments  is 
allowed  to  some  extent,  this  act  permitting  such 
a  large  number  of  instalments  was  opposed,  not 
without  reason,  by  the  city  comptroller^  at  the  time 
of  its  passage,  as  encouraging  extravagant  and 
speculative  expenditure  for  local  improvements. 
Apparently,  however,  no  serious  difficulty  has 
arisen  from  it,  nor  do  many  persons  care  to  post- 
pone payments  long  at  such  high  interest.  In  case 
of  the  non-payment  of  assessments, the  same  proced- 
ure for  enforcing  collection  by  sale  of  the  prop- 
erty obtains  as  with  general  taxes. 

The  outlay  on  assessment  accounts  naturally 
varies  far  more  from  year  to  year  than  does  that 
1  Chap.  544.  2  Comp.  Rep.,  1881,  p.  12. 


220  SPECIAL   ASSESSMENTS 

on  the  regular  appropriation  account.^  After  the 
enormous  assessment  expenditures  of  the  period 
from  1869  to  1876,  there  was  a  great  falling  off, 
the  amount  for  1879  being  only  $'576,369,  while  dur- 
ing the  following  decade  they  averaged  about  one 
and  one-half  millions  yearly.  Since  1890  there  has 
been  a  rather  marked  growth  in  such  enterprises, 
the  largest  outlay,  in  1893,  reaching  $4,724,339; 
this  increase  is  largely  due  to  activity  in  open- 
ing and  improving  streets  in  the  annexed  territory.^ 
The  proportion  between  outlay  for  street  openings 
and  for  street  improvements  varies  greatly  at  dif- 
ferent times.  During  the  Ring  period  the  former 
usually  exceeded  the  latter,  and  for  some  years 
after  that  period  the  street  openings  involved 
nearly  as  large  expenditures  as  did  the  improve- 
ments ;  but,  doubtless  in  part  from  the  repeal  of 
the  law  allowing  half  their  cost  to  be  thrown  on 
the  city  as  a  whole,  opening  enterprises  have 
since  fallen  off  materially  and  are  usually  only 
from  a  quarter  to  a  half  as  extensive  in  amount 
as  street  improvements. 

1  See  Appendix,  Tables  I  and  II,  for  annual  expenditure  and 
for  bonds  outstanding. 

■^  Assessment  lists  received  by  the  board  of  assessors  from  the 
commissioner  of  the  annexed  territory  in  1892,  $252,442,  from  the 
commissioner  of  public  works,  $1,267,615;  in  1893,  $1,651,503  and 
$1,242,648;  and  in  1894,  $1,438,755  and  $2,366,287,  respectively. 
Annual  Reports  of  Board  of  Assessors,  City  Record,  1893,  p.  1075; 
1894,  p.  looi;    1895,  P-  I  "53- 


CHAPTER   IX 

CITY    PROPERTY    AND    FRANCHISES 

§  40.  Importance  of  Revenue  from  Property  and 
FraticJiises. 

New  York  city  derives  nearly  one-fourth  of  her 
annual  income  from  miscellaneous  sources  outside 
of  taxation  and  special  assessments.  As  already 
explained,  a  considerable  part  of  these  miscella- 
neous revenues  are  of  such  a  character  that  their 
management  is  either  largely  out  of  the  control  of 
the  financial  authorities  or  is  subject  to  other  than 
financial  motives.  Thus  the  great  income  from 
excise  licenses  is  simply  incidental  to  the  regula- 
tion of  the  liquor  traffic,  and  the  excise  system  is, 
moreover,  now  under  exclusive  control  of  state 
officers.  More  than  seven  millions  were,  how- 
ever, received  in  1896  from  city  property  and 
franchises,  and,  in  the  management  of  these,  reve- 
nue is  something  more  than  an  incidental  feature. 
A  study  of  the  income  from  these  sources  is  the 
subject  of  this  chapter.  Of  the  various  forms  of 
j:)roperty  and  franchise  rights  enjoyed  by  the  me- 
tropolis, several  of  the  most  important  —  ferries, 


222  CITY  PROPERTY  AND   FRANCHISES 

docks,  markets,  and  real  estate  —  had  their  origin, 
as  we  have  seen,  far  back  in  the  colonial  days, 
when,  in  accordance  with  the  custom  of  the  time, 
they  were  granted  by  the  central  government  to 
the  municipality.  No  other  American  city  was 
ever  so  favored  in  this  regard.  Indeed  a  large 
part  of  the  soil  of  Manhattan  island,  now  so  im- 
mensely valuable,  was  once  owned  by  the  corpo- 
ration under  royal  grants ;  but  most  of  this  was 
sold  off  before  the  middle  of  the  present  century, 
to  meet  extraordinary  outlays. 

In  the  management  of  municipal  property  and 
franchises,  the  purpose  of  deriving  the  greatest 
possible  income  for  the  city  is  by  no  means  in 
every  case  the  sole  or  even  the  paramount  motive 
that  should  control ;  but  under  present  conditions 
the  success  of  their  administration  may  be  judged 
in  part  by  the  return  received.  There  has  indeed, 
during  the  past  twenty  years,  been  a  conscious 
effort  on  the  part  of  the  city  to  build  up  its  reve- 
nues from  these  sources,  and  though  the  criticism 
is  often  and  justly  made  that  the  policy  is  still  far 
from  satisfactory,  a  marked  advance  has  actually 
been  accomplished.  The  rapid  increase  in  the 
main  classes  and  in  the  total  of  the  revenue  from 
property  and  from  franchises  may  be  seen  from 
the  following  table.  The  growth  since  1880  is 
specially  striking. 


IMPORTANCE    OF  REVENUE 


223 


K 
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<; 

OS 

Q 

z 

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(Kl 
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P- 
O 
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Ph 

o 

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■is      i;      ii       oj 


c      ^ 


(2     c?.     U     Q     ?^ 


224  C/7'I'   PROPERTY  AND   FRANCHISES 

Nearly  the  whole  income  from  the  sources  above 
named  is  devoted  to  one  or  other  of  the  two  sink- 
ing funds,  and  accordingly  the  commissioners  of 
the  funds  are  given  considerable  power  in  man- 
aging some  of  these  revenues.  There  is,  however, 
no  consistency  in  this  regard.  It  is  unfortunate  in 
many  ways  that  all  income  from  every  source  is 
not  turned  into  a  single  fund  and  placed  under  the 
control  of  the  body  which  fixes  the  budget.  By 
this  plan  a  systematic  policy  of  cultivating  the 
city  revenues  would  be  possible. 

§  41.  City  Property  —  its  Management  and  Reve- 
nues. 

The  Croton  waterworks  represent  a  far  greater 
investment  and  yield  a  far  greater  gross  revenue 
than  any  other  form  of  city  property.  The  in- 
estimable value  of  the  bountiful  and  wholesome 
water  supply  which  they  furnish  cannot  be  meas- 
ured by  the  money  income  they  bring  the  city. 
The  motive  of  rendering  good  water  available  for 
every  citizen  at  a  moderate  cost  should  prevail 
here  ;  a  hard  bargain  ought  not  to  be  driven  with 
the  people,  as  appears  to  be  the  case  in  some 
German  cities,  where  the  waterworks  are  made  to 
pay  a  high  rate  of  profit.  Indeed,  there  is  much 
to  be  said  in  favor  of  the  practice  in  some  cities 
{e.g.  Manchester  and  other  English  towns),  where 
the  charge  for  water  is  reduced  almost  to  zero, 
and  the  cost  of  the  system  is  chiefly  borne  by 
general  tax.      In  New  York,  however,  the  water 


REVENUE   FROM   CITY  PIWPERTY  225 

plant  is  made  nearly  self-supporting.  Compara- 
tively slight  discretion  is  required  in  the  financial 
management,  since  the  consumption  of  water  can 
be  increased  or  decreased  only  within  rather  narrow 
limits.  The  rates  of  water  rents,  which  are  fixed 
by  the  department  of  public  works  and  have  been 
changed  but  little  for  many  years,  vary  with  the 
extent  and  character  of  the  consumption.  Meters 
have  been  introduced  gradually,  and  are  now  used 
in  determining  about  half  the  rents  collected. ^ 
Some  discretion  is,  of  course,  required  in  deciding 
what  extensions  of  the  mains  shall  be  made  from 
time  to  time ;  to  authorize  these  requires  a  three- 
fourths  vote  of  the  city  council,  but  the  aggregate 
expenditure  is  limited  to  $250,000  yearly,  and  ap- 
parently the  board  of  estimate  and  apportionment 
may  restrict  the  appropriation  as  it  sees  fit. 

The  increase  in  the  receipts  from  water  rents 
was  approximately  uniform  up  to  1880,  since  when 
it  has  been  much  faster,  so  that  they  have  more 
than  doubled  in  fifteen  years,  reaching  $4,073,856 
in  1896.  Notwithstanding  the  enormous  capital 
invested  in  the  water  system,  it  has  proved  a 
fairly  successful  undertaking  from  the  purely  com- 
mercial standpoint.  We  may  assume  the  original 
capital  outlay  as  approximately  $72,000,000,  —  the, 
total  amount  of  bonds  issued  since  the  inception  of 
the  work.2      If   from   the  water  revenue   of    1896 

^  Annual    Report    Department    of   Public  Works,    City  Record, 
1895,  P-  77--  ^  ^^^  Table  V,  Appendix. 

Q 


226  CITY  PROPERTY  AND   FRANCHISES 

we  deduct  the  $750,000  paid  from  the  budget 
for  running  expenses  of  the  system,^  and  perhaps 
$250,000  more  for  the  salaries  of  officers  (insepa- 
rable from  the  general  salaries  of  the  department  of 
public  works),  we  shall  have  approximately  three 
millions  as  the  receipts  for  the  year,  which  would 
represent  a  little  more  than  four  per  cent  on  the 
investment.  At  present,  to  be  sure,  the  amount 
paid  annually  for  interest  on  water  bonds  (about 
$1,600,000)  and  for  rapidly  amortizing  the  water 
debt  (about  $1,700,000)^  leaves  a  slight  yearly 
deficit  which  must  be  made  up  from  taxes  ;  but 
there  is  reason  to  believe  that  the  debt  charges 
will  gradually  decrease,  at  least  in  proportion  to 
income.  Should  the  waterworks  system  thus  be- 
come capable  of  earning  a  clear  profit  above  all, 
a  reduction  in  rates  for  service  would  perhaps  be 
the  best  policy. 

Most  of  the  upland  real  estate  once  owned  by 
New  York  had  been  sold  off  before  1850,  but 
what  was  then  left  has  for  the  most  part  been 
retained  and  brings  in  a  slowly  increasing  reve- 
nue, now  amounting  to  about  $100,000  yearly. 
Leases  of  real  estate,  like  other  leases  of  prop- 
erty, must  be  at  auction,  and  for  not  more  than 
a  ten-year  period.  The  commissioners  of  the  sink- 
ing fund  have  exclusive  control  of  this  property. 
Another  form  of  city  property  which  is  of  decreas- 

1  Budget,  1896;    City  Record,  1896,  pp.  121,  122. 

-  Ibid.     See,  also,  Cump.  Rep.,  1896,  Statement  D,  Part  II. 


REVENUE    FROM  CITY  PROPERTY  22/ 

ing,  rather  than  increasing,  importance  is  the  mar- 
kets, the  revenue  from  which  actually  fell  from 
^372,076  in  1870  to  $285,392  in  1896.  This  de- 
crease is  doubtless  largely  due  to  the  fact  that 
by  changes  in  business  methods  markets  have 
come  to  be  of  less  general  use,  but  it  is  likewise 
charged  that  the  management  is  somewhat  loose, 
and  that  lessees  of  stalls  from  the  city  often  relet 
their  holdings  at  great  advances. 

Far  different  has  been  the  history  of  the  revenues 
from  land  under  water  and  from  the  dock  system 
connected  with  it.  Although  the  sale  of  the  entire 
water  front  had  been  often  advocated,  and  con- 
siderable parts  had  been  actually  disposed  of 
before  1870,  yet  there  remained  a  very  large  pro- 
portion belonging  to  the  city  when,  in  that  year,  a 
definite  and  comprehensive  policy  for  a  system  of 
municipal  docks  was  adopted.  The  city  was  even 
authorized  to  buy  back  wharf  property  held  by 
private  persons,  and  especially  for  the  past  three 
or  four  years  considerable  purchases  of  this  sort 
have  been  made.^  No  little  progress  has  been 
made  in  the  general  reconstruction  of  the  water 
front ;  fine  stone  piers  are  taking  the  place  of  the 
old  wooden  ones,  and  there  is  promise  that  New 
York  will  ultimately  possess  the  best  dock  system 
in  the  world,  all  under  municipal  ownership.     The 

^  ^3.389,060  was  spent  for  this  purpose  from  April  30,  1892,  to 
April  30,  1895.  Annual  Report  of  the  Dock  Department,  City 
Record,  1895,  P-  3075- 


228  CITY  PROPERTY  AND  FRANCHISES 

dock  revenues,  moreover,  have  increased  with  great 
rapidity,  multiplying  more  than  eightfold  since  the 
new  departure  of  1870.  Without  attempting  the 
impossible  task  of  estimating  the  entire  cost  of 
the  existing  docks,  a  rough  idea  of  the  profitable- 
ness of  this  property  may  be  formed  by  comparing 
the  amount  invested  since  1870  with  the  income. 
The  total  expenditure  under  the  new  system  (in- 
cluding cost  of  maintenance,  which  is,  however, 
not  over  a  fifth  or  sixth  of  the  whole)  to  April  30, 
1895,  was  $27,224,690.  The  dock  revenue  for  the 
year  ending  that  date  was  $  i  ,940,079,  or  about  'j\  per 
cent  on  the  investment  thus  calculated.  The  total 
income  from  docks  for  twenty-five  years  has  nearly 
equalled  the  current  and  capital  expenditures,^ 
excluding  interest  on  bonds.  When  the  system  is 
finally  completed  so  that  only  repairs  and  renewals 
are  necessary,  it  promises  to  yield  a  large  net  re- 
turn, unless  some  change  in  policy  is  deemed  more 
wise.  It  is  possible  that  to  protect  the  commerce 
of  New  York  from  the  competition  of  other  ports, 
it  may  be  best  to  reduce,  or  even  wholly  to  abol- 
ish, dock  charges,  as  has  been  done  by  some  other 
cities. 

By  a  curious  and  anomalous  arrangement,  the 
entire  expenditures  of  the  dock  department,  for 
current  as  well  as  permanent  purposes,  are  met  by 

1  Annual  Report  of  the  Department  of  Docks,  City  Record, 
1895,  p.  3075.  The  income  for  the  calendar  year  1895  ^^^^ 
$2,084,382. 


REVENUE   EROM   CITY  PROPERTY  229 

the  issue  of  bonds,  so  that  the  department  is  quite 
independent  of  the  control,  through  the  budget,  of 
the  board  of  estimate  and  apportionment.  Some 
supervision  over  it  is,  however,  retained  by  a  pro- 
vision requiring  the  approval  of  general  enterprises 
and  of  bond  issues  by  the  commissioners  of  the 
sinking  fund,  in  accordance  with  the  policy  of 
giving  that  body  at  least  a  certain  degree  of 
control  over  the  revenues  pledged  to  the  sinking 
funds.  The  dock  commissioners  themselves  have 
the  immediate  authority  to  grant  leases  of  wharf 
property.^  These  must  be  made  at  public  auc- 
tion, except  in  the  case  of  certain  districts  set 
aside  for  special  classes  of  traffic,  —  an  exception 
which,  however,  applies  to  more  than  half  the 
leases.  Indeed,  there  can  naturally  be  little 
competition  in  many  cases,  since  the  companies 
renting  wharves  usually  construct  buildings  upon 
or  near  them,  and  for  other  reasons,  also,  are 
little  inclined  to  change  their  location  from  time  to 
time.  Much  room  therefore  remains  for  careful 
bargaining  with  lessees.  The  city  collects  wharf- 
age charges  directly  in  a  few  cases,  but  usually 
farms  them  to  the  lessees,  though  the  rates  are 
fixed  by  statute.  Dock  leases  may  not  exceed  ten 
years  in  duration,  but  may  contain  covenants  for 
successive  renewals  at  advancing  rates  up  to  fifty 
years. 

The  New  York  and  Brooklyn  bridge  represents 

^  Cunsolitlatiun  Act,  §  7x6. 


230  CITY  PROPERTY  AND  FRANCHISES 

an  investment  of  about  eighteen  millions,  two- 
thirds  of  which  was  paid  by  the  latter  city.  The 
bridge  has  been  of  immense  economic  value  to 
both  cities,  and  it  is  a  wise  policy  that  has  reduced 
charges  for  its  use  to  a  minimum.  Foot  passen- 
gers now  cross  free,  and  the  fee  for  vehicles  is 
slight,  while  the  charge  for  crossing  on  the  cable 
cars,  which  are  operated  directly  by  the  bridge 
board,  is  only  three  cents.  Notwithstanding  the 
low  charges  then  in  force,  the  bridge  was  able  to 
pay  $320,000  to  Brooklyn  and  $160,000  to  New 
York  in  1895,  to  be  applied  in  paying  interest  on 
bridge  bonds ;  but  since  then  still  further  reductions 
in  rates  have  prevented  the  earning  of  net  revenue. 
Some  persons  even  advocate  making  all  forms  of 
transit  on  the  bridge  entirely  free. 

§  42.    Revenue  from  Fnxnchises. 

Although  the  receipts  from  ferries  are  ordinarily 
denominated  rentals,  they  are  more  properly  pay- 
ments for  franchise  privileges,  since  the  city  has 
invested  nothing  in  ferry  property.  As  judged 
solely  by  the  magnitude  of  the  revenue  derived, 
these  are  the  most  important  form  of  municipal 
franchises  in  New  York.  By  the  terms  of  the 
early  charters  the  metropolis  has  exclusive  right, 
as  against  the  other  cities  of  the  state,  to  collect 
money  for  the  privilege  of  ferries  terminating  in 
the  city.  The  entire  management  of  ferries 
belongs  to  the  commissioners  of  the  sinking 
fund,  who  must  lease  them   on   competitive   bids 


REVENUE   FROM  FRANCHISES  23  I 

for  not  over  ten  years  at  a  time.  There  has 
been  marked  improvement  in  administration  of 
the  ferries  during  the  past  fifteen  years.  The 
very  low  amount  of  rents  for  1880  ($66,693)  ^ 
was,  to  be  sure,  partly  explained  by  the  fact 
that  large  sums  due  from  the  Union  Ferry 
Company  were  in  litigation.  The  most  impor- 
tant forward  step  was  taken  in  1883  and  1884, 
when  the  practice  first  became  common  of  fixing 
a  rather  large  upset  price  for  the  lease,  and  several 
ten-year  leases  at  quite  high  rates  were  made. 
The  advantage  of  setting  a  minimum  price  is  ap- 
parent, since  —  despite  the  provisions  frequently 
made  that  the  company  holding  the  lease  must 
agree  to  sell  its  property  at  an  appraised  price  to 
the  next  successful  bidder  for  the  same  franchise 
—  the  possessor  of  the  ferry  cannot  but  be  in  a 
superior  position  over  all  competitors.  By  1890 
the  income  from  ferries  had  reached  $330,344,^ 
while  in  1896  it  was  $346,598.  The  success  of 
the  leasing  of  the  Bay  Ridge  and  Staten  island 
ferries  in  1894  is  specially  noteworthy.  The  com- 
petition for  these  was  strong.  The  upset  price 
fixed  for  the  former  had  been  5  per  cent  of  the 
gross  receipts,  to  be  not  less  than  $15,000  yearly  ; 
the  actual  sale  was  at  $15,000  annually,  plus  2iJq 
per  cent  of  the  gross  receipts,  that  percentage  to 
be  not  less  than  $21,000.  For  the  latter  ferry  the 
upset  price  was  5  per  cent  of  the  gross  receipts 

1  Comp.  Rep.,  1S80,  p.  15.  -  Ibid.,  1890,  p.  58. 


232  CITY  PROPERTY  AND   FRANCHISES 

plus  an  annual  payment  of  $22,500,  the  total  not 
to  be  under  $44,000  per  year ;  the  sale  was  at  5^ 
per  cent  and  a  yearly  payment  of  $22,500,  with 
the  same  required  total. ^  It  is  probable  that  these 
percentages  will  in  a  few  years  exceed  the  mini- 
mum total  amounts  prescribed.  As  the  income 
from  these  two  ferries  in  1892  under  the  {Drevious 
leases  was  $23,476  and  $28,709  respectively,^  it 
will  be  seen  that  the  new  arrangement  represents 
a  very  much  higher  return  to  the  city. 

The  rates  of  ferriage  are  for  the  most  part  fixed, 
or  at  least  limited,  by  law,  and  it  is  possible  that, 
by  a  policy  similar  to  that  which  has  reduced  the 
charges  for  the  use  of  the  East  river  bridge,  the 
attempt  should  be  made  to  lower  ferry  charges 
rather  than  to  increase  the  return  to  the  city.  In 
any  case  the  growing  competition  of  the  bridge 
traffic,  especially  when  the  second  East  river 
bridge  and  ultimately  perhaps  the  proposed  North 
river  bridge  are  completed,  will  probably  cut  into 
the  income  of  companies  and  city  from  ferries. 

Partly,  doubtless,  because  of  the  corruption  that 
has  been  so  prominent  in  connection  with  them, 
street  railway  franchises  have  attracted  far  greater 
attention  in  New  York  than  other  franchises  or 
city  properties,  and  the  granting  of  them  has  come 
to  be  regulated  by  laws  designed  to  remedy  the 
former  abuses.     Although  the  operation  of  these 

1  City  Record,  1894,  p.  1768;   Comp.  Rep.,  1894,  pp.  192-194. 
-  Comp,  Rep.,  1892,  p.  195. 


REVENUE   FROM  FRANCHISES  233 

laws  can  scarcely  be  said  to  have  proved  entirely 
successful,  New  York  now  receives  far  greater 
income  from  railways  than  any  other  American 
city.  The  new  charter  of  1897  has  gone  much 
further  in  the  direction  of  controlling  the  disposal 
of  franchises,  of  all  sorts ;  but  the  people  of  New 
York  in  general  have  hardly  as  yet  begun  to 
realize  that  other  franchises  besides  railways  ought 
to  yield  a  large  revenue. 

Though  the  Harlem  railway  was  built  as  early 
as  1830,  under  a  special  act  of  the  legislature,  it 
was  not  till  twenty  years  later  that  other  railway 
franchises  were  granted.  Five  important  lines  were 
chartered  during  the  fifties  by  the  corrupt  com- 
mon council,  with  no  compensation  to  the  city.^ 
The  receipts  of  these  —  the  Second,  Third,  Sixth, 
Eighth,  and  Ninth  avenue  lines — are  probably 
nearly  half  the  total  received  by  all  surface  roads  ;^ 
yet  from  them  (except  in  the  case  of  certain  exten- 
sions built  under  the  law  of  1884)  the  city  receives 
nothing  save  a  small  amount  from  car  license  fees, — 
^50  for  each  car,  —  and  even  the  payment  of  these 
was  long  contested.  Two  of  these  early  charters 
nevertheless  contained  provisions  allowing  the 
city  to  take  the  roads  at  their  actual  cost  after  a 

1  See  a7ite^  p.  71.  Much  of  what  follows  is  based  on  a  commu- 
nication from  the  comptroller  of  the  city  in  New  York  Senate  Docu- 
ments, 1886,  No.  40;   also  in  City  Record,  1886,  p.  425. 

■^  Precise  amounts  not  obtainable  because  three  lines  are  merged 
with  the  Metropolitan   Street   Railway  Company.      See  post,  p.  241. 


234  CITY  PROPERTY  AND   FRANCHISES 

certain  time,  and  during  the  present  year  the 
plan  of  taking  advantage  of  this  provision  has  been 
actively  urged,  but  it  is  not  Hkely  that  it  will  be 
carried  out. 

The  legislature  in  i860  took  away  from  the 
council  the  right  to  sanction  further  street  rail- 
ways, and  itself  granted  six  franchises  ^  during 
that  year  and  1863,  without  provision  for  payment 
to  the  city  ;  although  in  the  case  of  two  of  the 
roads  later  laws  allowing  extensions  required  some 
small  return  —  five  per  cent  on  the  net  receipts 
from  the  extension  in  one  case,  one  per  cent  on  the 
entire  gross  receipts  in  the  other.  Another  charter 
in  1868  provided  for  the  payment  of  $1000  per  an- 
num.2  In  1869  and  the  first  years  of  the  seventies 
the  legislature  adopted  a  somewhat  better  policy. 
One  franchise  was  granted  to  be  sold  at  auction, 
and  the  city  received  $150,000  for  it.^  Three 
others  were  given  without  competition,  but  three 
per  cent  of  the  gross  receipts  were  to  be  paid  to 

1  Dry  Dock,  E.  Broadway  and  Battery,  Laws,  i860.  Chap.  512, — 
five  per  cent  required  in  1866,  Chap.  883;  Bleeclvcr  St.  and  Fulton 
Ferry,  i860,  Chap.  514,  —  one  per  cent  required  in  1873,  Chap.  647; 
42d  .St.  and  Grand  St.  Ferry,  i860.  Chap.  515;  Central  Park,  North 
and  East  River,  i860,  Chap.  511;  Harlem  Bridge,  Morrisania  and 
Fordham  (now  merged  in  Union  Railway  Company),  1863,  Chap. 
361 ;  Broadway  and  Seventh  Ave.  Some  other  charters  were  granted 
in  i860  and  at  other  times,  but  this  account  regards  only  roads  in 
actual  operation  in  1896. 

2  Houston  St.,  West  St.  and  Pavonia  Ferry,  Laws,  1868,  Chap. 
625. 

'^  23d  St.  Railway,  Laws,  1869,  Chap.  823. 


REVENUE  FROM  FRANCHISES  235 

the  city.^  The  injustice  of  allowing  the  legislature 
thus  to  dispose  of  rights  properly  subject  to  local 
control  led  to  the  adoption  of  a  constitutional  amend- 
ment in  1875,^  prohibiting  all  special  legislation 
relating  to  street  railways.  The  amendment,  fur- 
ther, required  the  consent  of  the  local  governing 
body  for  the  construction  of  each  line,  and,  more- 
over, that  of  the  owners  of  half  in  value  of  the 
property  bounded  upon,  or  in  default  thereof  an 
order  of  court  based  on  the  report  of  three  com- 
missioners declaring  that  in  their  opinion  the  road 
ought  to  be  built.  No  general  law  regulating 
street  railways  was,  however,  passed  by  the  legislat- 
ure, nor  were  any  franchises  granted  in  the  me- 
tropolis, till  1884,  when  an  act  was  passed,'^  one  of 
whose  provisions  required  payment  to  the  city  of 
not  less  than  three  per  cent  of  the  gross  receipts 
for  the  first  five  years  and  five  per  cent  thereafter. 
The  local  authorities  might  at  discretion  also  pro- 
vide for  auction  sale  subject  to  these  minimum 
terms.  It  was  further  required  that  before  grant- 
ing any  franchise  a  public  hearing  of  those  inter- 
ested must  be  held,  after  duly  advertised  notice  of 
two  weeks. 

It  was  under  this  law  that  the  famous  Broadway 
Railway  franchise  was  granted.     Ovc]-  the  mayor's 

1  Central  Crosstovvn,  Laws,  1873,  Chap.  160;  Christopher  and 
loth  .St.,  ibid.,  Chap.  301 ;  42(1  St.,  Manhattanville  and  St.  Nicholas 
Ave.,  ibid..  Chap.  825. 

2  Constitution  of  1846,  Art.  3,  §  18.       ^  Laws,  1884,  Chap.  252. 


236  CITY  PROPERTY  AND  FRANCHISES 

veto,  the  council  at  first  bestowed  the  privilege  at 
the  minimum  terms  of  law,  despite  the  fact  that 
another  company  had  offered  a  million  dollars  for 
the  grant.  The  road,  however,  had  some  difficulty 
in  securing  connections  and  consent  of  property 
owners,  —  partly  owing  to  the  strong  popular  feel- 
ing,—  so  that  it  finally  applied  for  a  new  charter. 
The  council  passed  another  ordinance,  also  over  the 
mayor's  veto,  but  this  time  it  demanded  an  annual 
payment  of  $40,000  in  addition  to  the  legal  re- 
quirement. Though  these  terms  were  more  lib- 
eral, enormous  corruption  was  required  to  secure 
the  franchise.  Later  on,  a  large  number  of  alder- 
men were  indicted,  and  it  was  proved  that  $20,000 
each  had  been  paid  to  nearly  every  member  for  his 
vote.  Nevertheless,  during  this  same  year  and  the 
two  following,  the  city  council  continued  to  pass 
numerous  ordinances  authorizing  railways,  and  cor- 
ruption was  frequently  suspected.^  Mayor  Grace, 
however,  who  took  advanced  ground  in  favor  of  a 
better  system,  vetoed  most  of  these  ordinances, 
while,  in  the  case  of  the  half  dozen  passed  over 
his  vetoes,  the  railways  were  actually  constructed 
in  only  three  instances,  and  one  of  these  is  not 
now  in  operation.^  Neither  of  the  roads  operating 
pays  more  than  the  minimum  required  by  law. 

1  Compiled  from  Proceedings  of  Aldermen.  The  Cable  Railway 
franchise,  which  was  vetoed,  was  specially  condemned. 

-  42d  St.,  Manhattanville  and  St.  Nicholas  Ave.,  and  34th  St. 
railways  are  operating. 


REVENUE  FROM    FRANCHISES  237 

It  was  with  a  view  to  checking  further  abuse 
that  a  law  was  secured  in  1886,^  which  prescribed 
that  all  railway  franchises  must  be  sold  at  auction 
to  the  bidder  offering  the  highest  percentage  of 
gross  receipts,  in  no  case  to  be  less  than  the  three 
or  five  per  cent  minimum  previously  fixed.  While 
this  act,  which  is  still  in  force,  marks  some  advance 
over  the  earlier  practice,  it  has  quite  failed  to  ac- 
complish the  desired  end.  In  fact,  it  is  coming 
gradually  to  be  understood  that  street  railways  tend 
almost  inevitably  to  consolidation,  and  that  com- 
petition for  new  franchises  is  almost  impossible. 
Especially  within  the  past  few  years,  a  large  ma- 
jority of  the  numerous  lines  in  New  York  have  been 
united  into  the  Metropolitan  Street  Railway  Com- 
pany, against  which  practically  the  only  competitor 
for  traffic  or  for  new  franchises  is  the  Third  Ave- 
nue company.  For  an  independent  company  to  at- 
tempt to  establish  a  road,  without  the  cooperation 
and  the  connections  of  one  or  the  other  of  these 
great  systems,  would  be  foolhardy  indeed.  Accord- 
ingly, there  has  been  little  competition  for  the 
seven  or  eight  franchises  for  new  lines  granted 
since  1886;^  and  in  the  cases  where  the  percent- 

1  Laws,  1886,  Chap.  642.      Revised  by  Laws,  1890,  Chap.  565. 

2  The  following  are  the  chief  grants  for  new  roads :  Fulton  St., 
Grand  St.  Ferry,  and  Metropolitan  lines  at  the  3  per  cent  and  5  per 
cent  minimum;  North  and  East  River  at  \  per  cent  more  than  the 
minimum;  Columbus  and  Ninth  Ave.  at  \  per  cent,  Lexington  Ave. 
and  Pavonia  Ferry  at  \  per  cent.  Metropolitan  Crosstown  at  I  per  cent, 
and  Third  Ave,  extension  at  38.I  per  cent  more  tlian  the  minimum. 


238  CITY  PROPERTY  AND   FRANCHISES 

age  offered  by  the  successful  bidder  has  exceeded 
the  minimum  fixed  by  law,  it  has  been  by  only 
from  one-eighth  of  one  per  cent  to  one  per  cent, 
except  in  the  single  instance  when,  in  1894,  the 
Metropolitan  and  the  Third  Avenue  companies 
came  into  direct  competition  for  the  control  of  a 
system  in  the  suburban  district.  In  this  case, 
jealousy  perhaps  carried  the  bids  beyond  reason- 
able limits,  and  the  latter  company  finally  agreed 
to  pay  a  cash  bonus  of  $250,000,  besides  no  less 
than  38-|-  per  cent  of  the  receipts  in  addition  to 
the  minimum  of  3-5  per  cent  prescribed  by 
statute.  This  line  is,  however,  still  in  process 
of  building,  and  no  return  has  yet  been  received 
from  it.  A  specially  noteworthy  feature  of  this 
grant  was  that,  contrary  to  the  usual  practice,  the 
city  council  fixed  as  a  pre-condition  that  the  suc- 
cessful bidder  must  pay  at  least  two  per  cent  more 
than  the  legal  minimum,  and  a  bonus  of  $250,000. 
Aside  from  the  various  franchises  granted  under  the 
act  of  1886,  that  of  the  Union  Railway  Company, 
which  operates  in  the  annexed  territory,  was  be- 
stowed in  1892  by  a  special  act  of  the  legislature.^ 
At  present,  this  road  pays  nothing  whatever  to 
the  city,  but  when  its  receipts  reach  $1700  a  day, 
it  will  pay  one  per  cent  upon  them. 

Besides  these  new  roads,  less  important  exten- 
sions have  been  authorized  from  time  to  time,  on 
most  of  whose  receipts  only  the  lowest  allowable 

1  Laws,  1S92,  Chap.  340. 


REVENUE   FROM  FRANCHISES  239 

percentage  is  paid  to  the  city.  Of  the  railways  bear- 
ing separate  names  in  actual  operation  in  New  York 

—  disregarding  for  the  moment  the  fact  that  most 
of  them  are  now  united,  which  makes  no  change 
in  the  obligations  of  the  separate  parts  to  the  city 

—  ten  pay  to  the  city  nothing  on  their  original 
lines  except  car  license  fees,  though  one  of  these 
paid  at  the  outset  a  bonus  of  $150,000;  one  pays 
$1000  yearly;  while  fourteen  pay  percentages  of 
from  one  to  six  per  cent  on  their  gross  receipts.^ 
In  the  case  of  the  Broadway  and  Seventh  Avenue 
Railroad,  the  successor  of  the  Broadway  Railway, 
an  ordinance  of  1889,  in  return  for  added  privi- 
leges, prescribed  that  the  minimum  yearly  pay- 
ment of  five  per  cent  should  be  not  less  than 
$150,000,  and  this  large  sum  constituted  almost 
half  of  the  total  receipts  from  railways  last  year. 
All  the  other  roads  combined  paid  about  $105,000 
as  percentages  and  $47,000  as  car  license  fees  in 
1896. 

Bitter  as  have  been  the  complaints  over  the  in- 
sufficiency of  the  return  which  has  been  received 
for  the  immense  privileges  conferred  on  street  rail- 
ways in  the  metropolis.  New  York  has  on  the  whole 
been  more  fortunate  in  this  regard  than  almost  any 
other  American  city,  except  perhaps  Philadelphia, 
St.  Louis,  and  Baltimore.  Several  of  our  great  cities 
receive  practically  nothing  from  railways.     Never- 

^  See  Comp.  Rep.,  1896,  table  of  railway  franchises,  comparing 
summary  above  given. 


240  CITY  PROPERTY  AND   FRANCHISES 

theless,  the  percentages  paid  by  the  New  York  com- 
panies are  utterly  inadequate,  so  long  as  fares 
remain  at  the  present  rates.  The  gross  receipts  of 
the  surface  roads  in  1896  were  nearly  $15,000,000,^ 
so  that  the  amount  paid  to  the  city  was  barely  two 
per  cent  on  the  average.  Evidently  we  could  fully 
appreciate  the  insufficiency  of  this  return  only  by 
knowing  accurately  the  rate  of  profit  that  the  cor- 
porations are  deriving  on  the  amount  of  capital 
actually  invested.  It  is  generally  conceded  that 
the  securities  of  the  companies  are  very  heavily 
'  watered  '  ;  though  the  precise  amount  of  over- 
capitalization is  naturally  impossible  to  ascertain, 
those  most  familiar  with  the  subject  are  convinced 
that,  on  the  average,  the  surface  railways  yield 
probably  between  20  and  30  per  cent  on  their 
real  cost,  if  not  even  more.  Mayor  Grace,  in 
vetoing  the  franchise  of  the  Cable  Railway  in 
1886,  stated  that  in  1884  the  capital  of  the  sur- 
face railways  in  operation  was  $15,707,153,  their 
bonded  debt  $11,266,665;  ^hat  in  that  year  I4|- 
per  cent  dividends  on  the  average  had  been  paid 
on  the  capital  and  6.8  per  cent  interest  on  the 
bonds.  He  declared  it  more  than  a  fair  assump- 
tion "  to  place  the  actual  cost  of  their  con- 
struction and  equipment  at  the  aggregate  of  their 
bonded  indebtedness "  ;  so  that  on  this  basis 
the  dividends  and   interest   paid    would   represent 

^  Compiled     from     Railroad    Commissioners'    Annual    Report, 
1895-6. 


REVENUE   FROM  FRANCHISES  241 

a  return  of  27  per  cent  on  the  bona  fide  invest- 
ment.^ 

If  the  over-capitalization  were  such  in  1884,  the 
consolidations  that  have  taken  place  since  that  day- 
have  been  made  the  occasion  of  still  greater  water- 
ing. The  Metropolitan  Street  Railway  Company 
now  includes  or  controls  more  than  twenty  lines 
which  six  or  eight  years  ago  were  practically 
independent,  but  which,  by  a  complicated  series 
of  sales,  consolidations,  leases,  and  re-leases,  have 
been  united  into  the  greatest  street  railway  sys- 
tem in  the  world. ^  In  1892,  fifteen  of  these  com- 
panies—  the  most  important  ones  —  had  a  capital 
and  bonded  debt  of  about  $2 1,000,000  on  a  trackage 
of  142  miles,  a  little  less  than  $150,000  per  mile  of 
single  track.^  In  1895-6,  the  Metropolitan  com- 
pany, which  then  comprised  these  fifteen  lines  only, 

^  Message,  City  Record,  1886,  p.  720.  Strong,  though  hardly 
specific,  statements  as  to  '  watering '  are  made  in  the  report  of  the 
special  legislative  committee  on  Municipal  Ownership,  Assembly 
Documents,  1896,  No.  53. 

-These  are:  Houston  St.,  West  St.  and  Pavonia  Ferry;  Cham- 
bers and  Grand  St.;  Broadway  Surface;  Broadway  and  Seventh 
Ave.;  Metropolitan  Crosstown;  Ninth  Ave. ;  Sixth  Ave.;  23d  St.; 
Bleecker  St.  and  Fulton  Ferry;  Central  Park,  North  and  East 
River;  42d  St.  and  Grand  St.  Ferry;  Eighth  Ave.;  Lexington 
Ave.  and  Pavonia  Ferry;  Columbus  and  Ninth  Aves.;  Fulton  St.; 
New  York  and  Harlem;  34th  St.;  34th  St.  and  Eleventh  Ave.; 
Christopher  and  loth  Sts.;  Central  Crosstown.  See  Report  of 
Railroad  Commissioners,  1895-6,  and  manuscript  records  in  com- 
missioners' office. 

^  Compiled  from  Railroad  Commissioners'  reports. 
R 


242  CITY  PROPERTY  AND   FRANCHISES 

had  increased  the  capitalization,  —  counting,  as  must 
properly  be  done,  that  of  leased  lines  represented 
by  rentals  paid,  —  to  $51,000,000;  while  the  track 
operated  had  increased  only  to  171  miles,  the 
average  capital  being  thus  $300,000  per  mile. 
Since  1895  the  capitalization  has  been  raised  to 
more  than  $65,000,000,  the  amount  per  mile  re- 
maining about  the  same.^  There  can  be  no  doubt 
that  this  represents  vastly  more  than  the  real  cost 
of  the  lines.  An  expert  has  recently  testified  that 
the  average  cost  of  constructing  a  street  rail- 
way (if  built  with  double  tracks,  as  are  most  in 
New  York)  on  asphalt  pavement  is  about  $16,000 
per  mile  of  single  track,  and  this  includes  the 
overhead  trolley  fixtures.^  While  the  cost  would 
naturally  be  higher  in  New  York,  and  while  the 
cable  system,  which  is  being  largely  introduced  by 
the  Metropolitan  company,  is  more  expensive,  there 
is  little  question  that  from  $50,000  to  $100,000 
per  mile  would  cover  amply  the  actual  cost  of  the 
lines  of  the  company,  including  their  rolling  stock 
and  power  plant,  and  that  the  greater  part  of  the 
immense  additions  to  the  capitalization  of  the 
system  since   1892  is  pure  'water.' 

Yet  vast  as  is  the  capital  of  the  Metropolitan, 
it  is  managing  to  pay  a  very  respectable  rate  of 
interest  on  the  whole.  The  net  earnings  for 
1895-6     (taxes    deducted)     were     $3,538,397,    or 

^  More  complete  figures  have  not  yet  been  published. 
2  Assembly  Documents,  1896,  No.  53. 


REVENUE   FROM   FRANCHISES  243 

almost  seven  per  cent  on  the  entire  amount  of 
securities  then  outstanding.  The  system  of  leas- 
ing lines  and  paying  dividends  on  their  capital  is 
perhaps  intended  partly  to  blind  the  public  as  to 
the  real  rate  of  profit.  The  distribution  of  the 
net  income  of  the  company  to  various  forms  of 
capital  was  as  follows  :  — 

Interest  on  $9,400,000  bonds    ....  $357,500  or  3.9% 

Dividends  on  $16,500,000  stock  .  .  .  1,252,500  or  7.65  % 
Rentals    on    $25,634,000    securities    of 

leased  roads 1,714,049  or  6.68% 

Surplus 214,347 


$3^538,397 


These  figures  help  us  to  appreciate  the  utter 
insufficiency  of  the  payments,  properly  designated 
as  being  in  return  for  their  franchise  privileges, 
made  to  the  city  by  street  railways.  It  is  a  matter 
of  some  little  importance  that  these  railways  are 
at  least  compelled  to  contribute  a  fair  proportion 
to  the  general  taxes.  The  assessment  of  tracks 
as  real  estate  was  first  attempted  in  1879,  'ind 
after  some  litigation  was  upheld  by  the  courts,^ 
while  a  law  of  1881  specially  authorized  their 
assessment  in  this  manner.^  About  the  same  time 
too  the  personal  assessments  of  the  companies 
were    considerably  increased.     In    the  case  of  all 

1  People,  ex  rel.,  N.  Y.  El.  R.  R.  Co.  v.  Comrs.  of  Taxes,  82  N.  Y. 

459- 

'^  Laws,  1 88 1,  Chap.  293. 


244  CITY  PROPERTY  AND   FRAXCHISES 

the  surface  railways  except  the  Broadway  line,  the 
aggregate  taxes  of  both  classes  are  now  much 
more  each  year  than  the  amount  paid  for  franchise 
and  license  fees.^  However,  as  all  other  property 
in  the  city,  though  it  does  not  receive  its  value 
specially  from  municipal  gift,  has  likewise  to  pay 
taxes,  it  is  by  no  means  just  to  reckon  these  taxes, 
which  indeed  are  assessed  on  much  less  than  the 
true  value  of  the  property,  as  in  any  sense  a  pay- 
ment for  the  special  privileges  of  the  railways. 

The  elevated  railways  of  New  York  at  present 
pay  nothing  to  the  city  except  ordinary  taxes. 
The  Greenwich  Street  line,  which  was  the  first 
constructed,  was  required  by  its  charter,  granted 
by  the  state  legislature  in  1867,^  to  pay  five  per 
cent  of  its  net  receipts  to  the  city,  to  be  used  in 
improving  the  appearance  of  the  elevated  struct- 
ures and  of  the  streets  in  which  they  stood.  The 
percentage  continued  to  be  paid  till  1890,  and  for 
some  years  before  that  time  amounted  to  $20,526 
yearly;^  but  since  then  the  consolidated  company 
has  refused  payment  on  this  part  of  its  lines,  and 
the  matter  is  dragging  through  litigation.  The  New 
York  Elevated  Railway  Company,  chartered  by  the 
legislature  in  1871,  succeeded  to  the  possession  of 
this  original  road,  but  it  also  vastly  extended  the 

1  From  figures  in  the  manuscript  tax  books  of  1895.  ^^^  Third 
Ave.  line,  which  pays  far  the  most,  paid  $17,897  of  real,  and  $5183 
of  personal,  taxes  in  1895. 

-  Laws,  1867,  Chap.  489.  ^  Comp.  Rep.,  1891,  p.  t,-^. 


REVENUE  FROM  FRANCHISES  245 

system,  and  on  the  added  mileage  never  paid  com- 
pensation. The  same  is  true  of  the  lines  of  the 
Metropolitan  Elevated  Railway  Company.  The 
constitutional  provision  of  1875  regarding  street  rail- 
ways did  not  extend  to  elevated  roads,  and  in  the 
same  year  the  legislature  passed  a  general  '  rapid 
transit '  act,^  which,  while  it  requires  the  consent  of 
special  court  commissioners  for  building  structures, 
does  not  provide  for  the  consent  of  property  own- 
ers or  for  compensation  to  the  municipality.  All 
the  elevated  roads  in  the  city  have  now,  following 
the  inevitable  tendency  which  we  saw  regarding  the 
surface  lines,  become  consolidated  into  the  Man- 
hattan company,  whose  gross  earnings  are  almost 
equal  to  those  of  all  the  surface  roads  combined. 
The  over-capitalization  of  this  company  is  probably 
fully  as  excessive  as  is  that  of  the  surface  lines. 
It  pays  about  six  per  cent  annually  on  $76,596,000 
of  stock  and  bonds,^  although,  owing  to  the  grow- 
ing competition  of  the  cable  roads,  it  has  been 
compelled  of  late  to  cut  somewhat  into  its  surplus 
to  keep  up  its  dividends.  Fortunately  the  taxes 
on  the  elevated  structures  as  real  estate,  which 
began  at  the  same  time  as  those  on  the  surface 
tracks,  have  been  relatively  more  important  than 
the  latter.^     The  company  also  pays  large  personal 

1  Laws,  1875,  Chap.  606. 

2  Annual    Report    of   the    Railroad    Commissioners,  New   York 
Senate  Documents,  1895,  ^'^-  '°'  P-  7'^- 

"*  Manuscript  tax  records. 


246  CITY  PROPERTY  AND   FRANCHISES 

taxes,  the  amount  of  both  classes  in  1895  being 
more  than  half  a  million  dollars.  The  taxes  for 
1896,  however,  were  contested  by  the  company  on 
the  ground  that  the  assessment,  which  amounts  to 
less  than  half  the  capital  of  the  lines,  is  more  than 
the  value  of  the  road,  and  the  courts  have  granted 
some  reduction. 

The  policy  of  the  city  regarding  lighting,  steam 
heating,  telephone,  and  similar  franchises  has  hith- 
erto been  even  less  rational  than  that  re^'ardino; 
railways.  The  private  companies,  which  have  en- 
tire control  of  all  these  enterprises,  have  never, 
with  one  exception,  paid  any  compensation  worthy 
of  the  name  for  their  privileges.^  In  general  only 
a  nominal  sum  is  required  for  each  foot  of  street 
opened  —  three  cents  a  foot  in  most  cases.  The 
Equitable  Gaslight  Company,  however,  whose 
charter  was  granted  in  1883,  up  to  1894  paid  a 
fair  percentage  of  its  gross  receipts,  the  amount 
receiv^ed  by  the  city  in  that  year  being  ^18,690;^ 
but  here  again  some  pretence  for  ceasing  payment 
has  since  been  devised.  The  charges  for  gas  and 
electric  lights  in  New  York  are  high,  and  the  prof- 
its of  the  companies  on  largely  watered  stock  are 
great.  The  same  powerful  tendency  to  combina- 
tion appears  as  with  railways.  A  legislative  com- 
mittee in  1886^  investigated  the  Consolidated  Gas 

1  In  1894  the  total  from  all,  except  the  Equitable  Company,  was 
only  $2177.     Comp.  Rep.,  pp.  21,  36.  -  Ibid.,  p.  23. 

^  Report  of  Special  Committee,  New  York  Senate  Documents. 
1886,  No.  47. 


REVENUE   FROM   FRANCHISES  247 

Company,  which  had  been  formed  by  the  union  of 
the  New  York,  Manhattan,  Metropolitan,  Munici- 
pal, Knickerbocker,  and  Harlem  companies ;  and 
declared  that  the  capital  of  the  original  companies, 
$17,000,000,  had  been  increased  to  $39,078,000  by 
the  combination,  without  the  addition  of  a  single 
dollar  of  real  investment,  but,  on  the  contrary,  with 
the  removal  of  over  $2,000,000  of  assets.  The  true 
value  of  the  plants  was  estimated  at  $15,000,000 
to  $20,000,000.  The  price  of  gas  in  New  York  at 
that  time  was  $1.75  per  thousand,  while  in  the 
case  of  many  English  cities,  both  with  municipal 
and  with  private  plants,  the  price  is  only  from  60 
to  75  cents  per  thousand.  As  a  result  of  this 
investigation,  a  law  was  passed  fixing  the  charge 
in  the  metropolis  at  $1.25.  In  1897  a  strenuous 
effort  was  made  to  secure  a  further  immediate  re- 
duction to  one  dollar,  but  the  bill  was  amended  to 
provide  that  the  price  should  be  lowered  five  cents 
each  year  till  that  figure  should  be  reached.  The 
price  of  electric  current  has  not  been  regulated  by 
statute. 

Fortunately  there  has  been  in  the  past  few  years 
a  rapid  growth  of  public  opinion  in  favor  of  a  more 
rational  system  of  managing  municipal  franchises, 
and  this  has  actually  had  some  practical  effect. 
The  experience  of  foreign  cities  with  railways  and 
lighting  plants,  and  especially  the  success  of  mu- 
nicipal ownership  of  these  enterprises,  has  been 
largely  cited  by  the  advocates  of  reform.      In  Ik-r- 


248  CITY  PROPERTY  AND   FRANCHISES 

lin,  for  instance,  the  consolidated  railway  company, 
besides  having  made  large  cash  payments  for  the 
original  franchises,  pays  8|  per  cent  of  its  gross  re- 
ceipts, reimburses  the  city  for  paving  and  cleaning 
between  its  tracks,  and  in  191 1  the  entire  system 
will  become  the  property  of  the  city  without  cost. 
In  many  other  continental  cities  a  similar  provision 
for  reversion  of  the  tracks  to  the  public  exists. 
The  absurd  practice  of  granting  perpetual  fran- 
chises is  almost  unknown.  The  same  is  true  in 
Great  Britain.  Manchester,  Birmingham,  and  a 
large  number  of  other  cities  own  the  tracks  and 
lease  them  to  private  companies  at  very  favorable 
terms  ;  while  half  a  dozen  or  more  cities,  the  most 
important  being  Glasgow  and  Bradford,  actually 
operate  the  systems  by  municipal  employees,  and 
with  marked  success.  There  is  no  doubt,  more- 
over, that  the  usual  European  custom  of  propor- 
tioning street-car  fares  roughly  to  the  distance 
travelled,  results  in  a  considerably  lower  average 
rate  than  the  ordinary  American  five-cent  fare. 
The  lowest  charge  is  usually  two  or  two  and  a  half 
cents,  —  though  in  some  cases  even  less,  —  the 
highest  seldom  over  five  or  six  cents.  Many  of 
the  English  cities  likewise  own  and  operate  great 
lighting  plants,  and,  though  furnishing  service  at 
rates  much  lower  than  are  common  here,  succeed 
in  earning  a  handsome  net  revenue.^     So,  too,  most 

1  See  Dr.  Shaw's  Municipal  Govirnnient  in  Ci-eat  Britain,  and 
Municipal  Govei-nment  in  Continental  Europe. 


REVENUE  FROM  FRANCHISES  249 

German  cities  own  their  gas  works.  Their  aim, 
however,  seems  rather  to  gain  large  profits  than  to 
furnish  cheap  light,  —  the  price  ranging  from  $1 
to  $1.50  per  thousand. 1  Berlin  earned  a  net  return, 
after  paying  debt  charges,  of  nearly  a  million  dol- 
lars in   1893. 

One  indication  of  the  progress  of  the  movement 
toward  more  economical  management  of  municipal 
franchises  is  found  in  the  fact  that  the  recent  acts 
authorizing  the  construction  of  the  great  under- 
ground Rapid  Transit  system,  now  so  much  needed, 
have  provided  that  the  city  may  itself  build  and 
own  the  road,  if  it  chooses  to  do  so,  although  it 
must  in  that  case  be  operated  by  lease  to  a  private 
company.  The  enterprise  is  so  vast  that  private 
capital  has  so  far  hesitated  to  undertake  it,  and  it 
is  likely  that  the  system  will  actually  be  con- 
structed at  public  expense.  General  sentiment 
appears  to  be  favorable  to  this  plan  ;  but  its  fulfil- 
ment was  temporarily  checked  last  year  by  a  court 
decision  refusing  to  approve  the  propositions  of  the 
rapid  transit  commissioners,  on  the  ground  that  the 
loans  required  for  the  work  would  carry  the  city 
debt  beyond  the  constitutional  limit.  Though,  in 
view  of  the  rapid  growth  of  the  sinking  fund, 
it  is  doubtful  whether  this  fear  was  justified,  yet 
the  decision  has  probably  had  the  desirable  effect 
of  compelling  more  careful  consideration  and  the 
device  of  a  more  economical  i)lan.     The  provisions 

^  See  Statistisches  Jahrbuch  der  Dcutschen  Stiidte,  1S96. 


250  CITY  PROPERTY  AND   FRANCHISES 

of  law  for  recompense  to  the  city  from  the  private 
company,  whether  it  owns  or  merely  operates  the 
plant,  are  somewhat  indefinite,  considerable  dis- 
cretion being  left  to  the  rapid  transit  commis- 
sioners. In  case  the  company  is  allowed  to  own 
the  road,  its  franchise  must  not  be  perpetual,  but 
no  definite  limit  is  set.  If  the  company  operates 
the  city's  plant,  its  lease  may  be  for  not  less  than 
thirty-five  nor  more  than  fifty  years ;  and  it  must 
pay  the  interest  on  the  bonds  issued  by  the  city 
for  the  enterprise,  together  with  at  least  one  per 
cent  yearly  on  the  cost,  to  be  used  for  sinking  the 
debt.  The  minimum  terms  thus  fixed  are  consid- 
erably less  than  should  be  those  finally  demanded 
by  the  commissioners. 

The  Greater  New  York  charter  has  sought  re- 
form regarding  the  disposal  of  franchises  in  two 
directions,  —  by  placing  additional  checks  on  the 
grant  itself,  and  by  restricting  the  period  for 
which  the  franchise  may  run.  Hereafter  every 
ordinance  which  confers  a  privilege  involving  the 
use  of  public  streets  or  places  must,  after  its  intro- 
duction into  the  municipal  assembly,  be  referred 
to  the  board  of  estimate  and  apportionment,  which 
shall  investigate  as  to  the  proper  compensation  to 
be  paid  ;  and  the  ordinance,  which  requires  also 
a  three-fourths  vote  of  the  assembly,  cannot  be 
passed  except  upon  the  terms  fixed  by  the  smaller 
body.  If  the  mayor  interpose  his  veto,  a  five- 
sixths  vote  is   necessary  to    pass    the    ordinance. 


REVENUE   FROM  FRANCHISES  25  I 

The  grant  may  not  be  for  a  longer  period  than 
twenty-five  years,  but  may  provide  for  renewals 
thereafter,  from  time  to  time,  at  a  revaluation,  for 
an  aggregate  of  twenty-five  years  more.  The  ordi- 
nance may  also  prescribe  that  any  plant  established 
by  the  grantees  of  a  franchise  shall  become  the 
property  of  the  city  at  the  close  of  the  term,  either 
without  further  compensation  or  at  an  appraised 
valuation  ;  and  property  so  acquired  may  be  leased 
or  operated  by  the  city  itself.  These  regulations 
apparently  will  not  apply  to  ferry  and  dock  leases. 
These  provisions,  which  mark  a  great  advance 
over  any  law  on  the  subject  yet  adopted  in  this 
country,  with  perhaps  one  or  two  exceptions,  leave 
it  discretionary  with  the  city  to  prescribe  any 
terms  for  franchises  it  sees  fit ;  and  it  is  to  be 
hoped  that  the  growing  popular  sentiment  will  no 
longer  be  satisfied  with  the  insufficient  compensa- 
tion which,  under  the  present  system  of  auction 
without  real  competition,  has  usually  been  received. 
Even  if,  in  some  cases,  it  seems  wise  to  continue 
the  competitive  plan,  proper  minimum  terms  may 
be  set  for  the  grant.  The  most  satisfactory  change 
introduced  by  the  new  charter  is  that  it  does  away 
with  the  evil  practice  of  bestowing  perpetual  fran- 
chises. It  is  a  fair  question  whether  law  and 
justice  will  not  permit  at  some  time  the  demand 
by  the  city  from  companies  holding  old  grants  of 
some  more  reasonable  compensation  than  they  are 
now  making.     Of   course  it  is  a  matter  of  expe- 


252  CITY  PROPERTY  AND    FRANCHISES 

diency  whether  public  regulation,  in  regard  to 
franchises  both  heretofore  and  hereafter  granted, 
should  most  wisely  demand  greater  payments  to 
the  city  or  lower  rates  and  better  service  for  the 
people. 


CHAPTER   X 

THE    BUDGET    AND    CITY    EXPENDITURES 

Having  now  considered  the  variovis  heads  of  city 
income,  we  turn  to  city  expenditures  for  current 
purposes.  We  have  already  studied,  or  shall  later 
on  study,  the  control  and  nature  of  expenditures 
on  special  assessment  and  sinking  fund  accounts, 
so  that  we  may  now  confine  ourselves  for  the  most 
part  to  those  expenditures  which  compose  what  is 
technically  known  as  the  budget.  We  need  espe- 
cially to  consider  the  method  and  motives  by  which 
such  expenditures  are  determined ;  that  is,  to  con- 
sider the  budget  system.  Afterward  we  may  make 
a  less  detailed  study  of  the  items  of  expenditure 
themselves,  and  of  the  progress  of  expenditures 
during  the  recent  period  of  financial  history. 

§  43.      Outline  of  the  Budget  System. 

The  board  of  estimate  and  apportionment,  which, 
up  to  the  Greater  New  York  charter,  has  had  prac- 
tically exclusive  control  over  the  city  budget,  was 
composed,  under  the  law  of  1873,  of  the  mayor, 
comptroller,  president  of  the  department  of  taxes 
and  assessments,  and  j)resident  of  the  aldermen. 
To  this  board,  perhaps  with  a  view  to  making  a 
253 


2  54      THE  BUDGET  AND   CITY  EXPENDITURES 

majority  less  difficult  to  secure,  the  counsel  to  the 
corporation  has  recently  been  added. ^  He  was 
possibly  preferred  for  this  position  above  other 
executive  officers,  because  his  own  department  has 
less  to  do  than  most  with  spending  the  money 
appropriated,  while  his  opinion  on  legal  questions 
and  technicalities  connected  with  the  budget  is 
also  of  value. 

The  board  of  estimate  is  required,  under  the 
charter  of  1873,  to  make  annually,  on  or  before 
November  i,  a  provisional  budget  for  the  ensuing 
year,  the  extent  to  which  the  estimates  shall  enter 
into  detail  being  left  to  its  own  decision.  The  vote 
of  all  the  members  is  necessary  to  fix  the  gross 
amount  of  this  provisional  estimate,  as  well  as  that 
of  the  final  one,  although  in  each  case  a  majority 
vote  is  sufficient  to  act  on  details.  The  provisional 
budget  is  based  on  departmental  estimates,  pre- 
sented in  duplicate  to  the  board  of  estimate  and  to 
the  aldermen  ;  these  are  exceedingly  minute,  giving 
the  salaries  of  each  officer  or  employee,  and  the 
specific  purpose  of  each  expenditure.  In  practice 
the  department  heads  explain  somewhat  fully  the 
ground  of  each  demand  for  increase  of  appropria- 
tion. The  provisional  estimate,  as  fixed  by  the 
board  of  estimate,  with  their  reasons  for  it  in  detail, 
is  submitted  to  the  council,  and  simultaneously  pub- 
lished for  general  information  in  the  City  Record. 
The  board  of  aldermen  must  hold  a  special  meeting 

1  Laws,  1893,  Chap.  106. 


OUTLINE    OF   THE  BUDGET  SYSTEM       255 

to  consider  the  appropriations.  As  in  every  action 
involving  expenditure  of  money,  a  three-fourths  vote 
of  the  members  elected  is  required  to  make  any 
change  in  the  budget. ^  Within  fifteen  days  the 
aldermen  must  return  the  budget  to  the  smaller 
body,  with  a  statement  of  their  objections  or  recti- 
fications. After  this,  by  a  provision  added  to  the 
law  in  1880,^  the  board  of  estimate  must  set  a  special 
time  for  hearing  the  opinions  of  taxpayers  on  the 
appropriations.  In  deciding  on  the  final  budget, 
which  is  usually  voted  on  the  last  day  of  the  year, 
the  board  must  nominally  consider  the  suggestions 
of  the  aldermen,  and  should  it  overrule  them  must 
publish  its  reasons  for  doing  so  in  the  City  Record. 
As  we  shall  see,  the  real  influence  of  the  council 
in  the  appropriations  has  been  infinitesimal. 

The  expenditure  side  of  the  budget  being  thus 
determined,  little  discretion  is  required  in  provid- 
ing for  the  receipts.  As  is  the  case  in  almost  all 
our  local  governments,  the  one  great  source  of 
revenue  is  the  general  property  tax;  there  is  no 
place  accordingly  for  that  careful  deliberation  as 
to  ways  and  means  which  is  customary  in  many 
national  budgets,  and  which  is  coming  gradually 
to  find  entrance  into  those  of  our  states.  New 
York  indeed,  more  than  any  other  American  city, 
has  considerable  outside  revenues,  but  by  far  the 
greater  part  of  these  are  devoted  to  the  sinking 
fund,  and  are  managed  quite  iiulcpendcntly  of  the 

1  Consolidation  Act,  §  74.  '-^  Laws,  1880,  Chap.  521. 


256      THE   BUDGET  AND   CITY  EXPENDITURES 

annual  budgets.  There  are,  however,  a  number 
of  minor  receipts  which,  as  the  '  general  fund,'  go 
to  lower  taxes,  the  most  important  of  these  being 
from  interest  on  taxes  and  assessments,  sales  of 
old  material,  etc.,  and  school  moneys^  contributed 
by  the  state.  According  to  the  terms  of  the  char- 
ter the  amount  of  the  general  fund,  usually  about 
$2,000,000,  is  to  be  estimated  by  the  comptroller 
and  reported  directly  to  the  aldermen. ^  In  prac- 
tice, however,  the  board  of  estimate  and  appor- 
tionment definitely  decides  how  much  shall  be 
deducted  from  the  tax  levy  on  this  score.  The 
actual  levying  of  the  necessary  taxes,  to  cover 
the  remainder  of  the  appropriations,  must  be  by 
the  city  council,  but  its  action  in  this  regard  is 
purely  ministerial. 

By  another  of  the  many  complications  in  the 
financial  system,  the  income  from  liquor  and  the- 
atrical licenses  does  not  go  into  the  regular  budget, 
but  part  of  it  must  be  separately  appropriated  by 
the  board  of  estimate  to  various  charitable  institu- 
tions, part  goes  without  vote  to  the  police  and  fire- 
men's pension  funds,  while  a  considerable  balance 
is  usually  left  for  transfer  to  the  general  fund. 

A  further  anomalous  division  of  appropriating 
authority  exists  in  the  dock  department,  where  it 
was  first  introduced  by  the  charter  of   1870.     This 

1  Although  these  are  in  a  sense  income,  the  share  paid  by  the 
city  toward  state  school  taxes  is  considerably  greater  than  the 
amount  received  back.  -  Consolidation  Act,  §  829. 


OUTLINE    OF   THE  BUDGET  SYSTEM       257 

is  a  provision  that  all  expenditures  of  the  depart- 
ment must  be  met  by  the  issue  of  bonds.  The 
practice  is  proper  enough  as  regards  permanent 
improvements  of  the  dock  system,  but  no  possible 
justification  exists  for  meeting,  out  of  thirty-year 
bonds,  the  cost  of  ordinary  repairs  and  running 
expenses,  —  salaries,  cleaning,  etc.,  —  nor  for  re- 
moving the  control  of  these  expenditures  from  the 
regular  appropriating  board,  as  is  done  by  placing 
the  entire  authority  to  issue  dock  bonds  in  the 
sinking  fund  commissioners.  The  anomaly  is  per- 
haps partly  explained  by  the  fact  that  the  income 
from  docks  goes  to  the  sinking  fund,  u^hose  com- 
missioners thus  are  interested  in  their  manage- 
ment. 

The  Greater  New  York  charter  has  retained  this 
general  budget  system  with  only  one  important 
amendment.  Hereafter  there  is  to  be  no  recon- 
sideration of  the  appropriations  by  the  board  of 
estimate  and  apportionment  after  the  city  council 
has  acted  upon  them.  The  present  '  provisional 
budget '  will  become  the  final  apportionment,  ex- 
cept in  so  far  as  the  municipal  assembly,  by  a 
three-fourths  vote,  shall  decrease  the  amounts 
fixed  by  the  smaller  board,  the  assembly  having 
no  power  to  increase  any  item.  In  considering 
the  budget,  the  two  houses  of  the  council  will 
meet  in  joint  session,  and  they  must  complete  their 
work  within  fifteen  days.  If  the  mayor  disap- 
prove any  reduction  made  by  the  council,  a  five- 
s 


258       THE  BUDGET  AND   CITY  EXPENDITURES 

sixths  vote  is  necessary  to  override  his  veto.  This 
new  feature  of  the  charter  will  thus  give  the  city 
council  absolutp  power,  within  limits,  in  fixing  the 
city  appropriations,  instead  of  the  merely  advisory 
authority  which  it  now  possesses  and  which  is,  in 
fact,  quite  meaningless. 

§  44.  Absence  of  Poivcr  in  the  Common  Council. 
Fixed  Appropriations. 

If  indeed  we  consider  how  the  system  just  out- 
lined operates  in  practice,  and  what  influences 
actually  determine  the  appropriations,  we  may  at 
once  eliminate  the  board  of  aldermen  as  a  factor  in 
the  problem.  While  the  existing  law  gives  it  only 
advisory  power,  it  might  easily  happen  — -  were 
the  council  generally  respected  and  in  other  re- 
gards powerful  —  that  its  advice  should  be  of  very 
decided  weight.  But  such  not  being  the  case,  the 
board  of  estimate  and  apportionment  has  come  to 
pay  no  heed  to  the  action  of  the  aldermen.  Not 
only  are  their  suggested  ' rectifications'  overruled  in 
the  final  budget,  but  great  changes  are  made  from 
the  provisional  estimates  regarding  items  which 
they  have  not  acted  upon,  and  new  items  even 
are  often  inserted.  This  seems  clearly  contrary  to 
the  spirit  of  the  charter  of  1873,  which  mentioned 
no  further  procedure  by  the  board  of  estimate 
regarding  the  final  estimate  than  the  possible  re- 
jection of  the  changes  of  the  aldermen.  The  com- 
mon council  itself  has  so  interpreted  the  law,  and 
has  bitterly  but  vainly  ])rotested  against  any  modi- 


ABSENCE  OF  POWER  IN  COMMON  COUNCIL      259 

fication  except  as  to  such  items  ^  as  it  should  have 
specially  acted  upon.  But  that  the  legislature  was 
willing  to  allow  the  practical  disregard  of  this  pro- 
vision may  perhaps  be  inferred  from  the  passage 
by  that  body  of  the  amendment  allowing  the  hear- 
ing of  citizens  concerning  the  budget  after  the 
action  of  the  council. 

It  has  been  almost  invariably  the  tendency  of 
the  aldermen,  as  might  be  expected  from  their 
general  character,  to  increase  the  appropriations 
of  the  provisional  estimate ;  from  the  table  in  the 
appendix^  it  will  be  seen  that  up  to  1888  they 
added  on  the  average  about  half  a  million  annu- 
ally to  the  total.  The  fact  that  the  final  estimate 
often  exceeds  the  budget  as  revised  by  the  alder- 
men might,  on  the  surface,  indicate  that  their 
additions  had  been  concurred  in  by  the  board  of 
estimate  and  apportionment  ;  but  in  fact  nearly 
every  one  of  the  '  rectifications '  has  always  been 
overruled,  and  the  increases  have  been  made  quite 
independently  of  their  suggestions,  for  the  most 
part  in  other  items.  Often  the  council's  amend- 
ments have  been  rejected  as  a  body ;  more  fre- 
quently the  most  of  them  have  been  rejected  and 
one  or  at  best  a  few  items  approved  in  whole  or  in 
part.'^     The  absence  of  serious  consideration  of  the 

1  Proceedings  of  the  Aldermen,  vol.  180  (1886),  p.  991. 

2  See  Table  IV,  p.  376. 

3  City  Record,  1878,  p.  10;  1879,  p.  13;  1884,  p.  48;  1885, 
p.  18. 


26o       THE  BUDGET  AND   CITY  EXPENDITURES 

action  of  the  aldermen  is  seen  in  the  meaningless 
nature  of  the  '  reasons '  assigned  by  the  board  of 
estimate,  as  required  by  law,  for  overruling  it,  such 
as  that  the  "  increase  is  not  necessary,"  or  that  "  the 
appropriation  in  the  provisional  estimate  is  deemed 
sufficient."  ^  The  reasons  given  to  the  aldermen 
for  the  provisional  appropriations  themselves  are 
quite  as  little  justifications  of  them,  consisting  ordi- 
narily in  mere  statements  of  the  amounts  requested 
by  the  department  and  the  amounts  allowed,  which, 
it  is  explained,  are  "deemed  to  be  sufficient." 

The  common  council  has  naturally  come  to  take 
less  and  less  interest  in  the  exercise  of  its  merely 
formal  authority  over  the  city  purse-strings.  With 
rare  exceptions,  only  a  single  brief  session  is  de- 
voted to  the  budget,  unless,  indeed,  an  adjourned 
meeting  is  necessary  on  account  of  a  lack  of  the 
required  quorum  of  three-fourths  —  as  has  hap- 
pened several  times  of  late  years.^  The  changes 
proposed  have  grown  steadily  fewer  and  smaller. 
Since  1890,^  the  largest  increase  in  the  total  budget 
proposed  by  the  council  in  any  year  has  been 
$131,000,  of  which  $125,000  was  for  free  baths 
—  a  favorite  object  of  that  body.  In  1895,  indeed, 
no  definite  amendment  whatever  was  made,  al- 
though the  council  recommended  that  the  appro- 
priation for  the  register's  office  be  not  unduly  cut 

1  E.g.,  City  Record,  1884,  p.  48. 

2  City  Record,  1889,  p.  3651 ;    1891,  p.  3491 ;    1892,  p.  3447. 
^  Consult  City  Record  index,  November  each  year. 


FIXED  APPROPRIATIONS  26 1 

down.  Last  year  the  action  of  the  aldermen  on 
the  budget  for  1897  was  possibly  even  more  ludi- 
crous ;  they  increased  the  total  of  over  forty-five 
millions  by  ^1200  for  an  additional  stenographer 
for  their  own  body.  It  remains  to  be  seen  whether 
the  new  power,  given  under  the  charter  of  1897, 
will  prove  equally  futile. 

The  board  of  estimate  and  apportionment,  then, 
is  practically  unhampered  by  the  aldermen,  but 
this  by  no  means  signifies  that  it  alone  has  absolute 
control  of  the  budget.  All  the  charges  for  state 
taxes,  interest,  and  debt  redemption  are  fixed,  and 
specific  law  compels  their  insertion.^  These  three 
are  the  largest  and  the  most  fixed  of  the  required 
appropriations,  but  there  are  many  others.  A 
large  sum  goes  to  the  many  private  charitable  in- 
stitutions, to  which  the  legislature  has  required  the 
city  to  contribute  definite  amounts  annually.  The 
number  and  salaries  of  all  the  department  heads, 
and  of  their  leading  subordinates,  of  judges  and 
ofificers  of  the  city  courts,  are  established  by  stat- 
ute. Both  the  number  and  the  salaries  of  the 
police  force  are  prescribed,  as  is^  the  pay,  though 
not  the  number,  of  the  fire  department.  In  1886 
Mayor  Grace  showed,  in  detail,  that  almost  exactly 
three-fifths  of  the  appropriations  were  practically 
out  of   the   control   of    the   board. ^     A   somewhat 

1  Consolidation  Act,  §  194.  "  Ibid.,  §§  265,  287. 

^  Message,  City  Record^  1886,  ]).  21.  Some  corrections  in  the 
figures  are  necessary,  but  the  prDjJortion  is  about  as  given.      The 


262       THE  BUDGET  AND   CITY  EXPENDITURES 

less,  but  still  very  considerable,  proportion  holds  at 
present. 

The  board  of  estimate  and  apportionment  often 
points  to  the  amount  of  fixed  appropriations  as  an 
explanation  of  the  large  budgets,  and  complains  of 
its  own  weakness.  Of  course,  precisely  in  so  far 
as  these  required  charges  in  fact  vary  from  year 
to  year,  and  are  really  responsible  for  fluctuations 
in  the  gross  budget,  this  point  is  justifiable,  but  it 
has  sometimes  been  urged  unfairly.  In  fact,  the 
board  has  control  of  practically  all  expenditures 
which  can  properly  be  subject  to  discretionary 
action  from  year  to  year.  There  is  always  in  the 
budget  of  any  political  body  a  distinction,  more  or 
less  clear,  between  appropriations  that  are  fixed 
and  recurrent,  and  those  which  can  more  readily 
be  reduced  or  increased.  While  it  would  be  de- 
sirable that  the  organization  of  the  departments, 
the  fixing  of  salaries,  the  determination  of  the 
number  and  compensation  of  policemen,  firemen, 
etc.,  should  be  matters  of  home  rule,  rather  than 
of    often    ill-considered   legislative  action,    yet  all 

most    important    of    the    fixed    appropriations    which    he    named 
were  :  • — 

Interest ;^7,40i, 300.80 

Redemption 779,580.76 

State  taxes 4,183,708.46 

Police  department 3,671,792.10 

Fire  department 1,293,100.00 

Judiciary 1,006,050.00 

Charitable  institutions 1,094,002.40 


FIXED  APPROPRIATIONS  263 

these  might  properly  be  prescribed  by  permanent 
ordinance,  and  not  left  open  to  annual  changes  at 
the  time  of  voting  the  budget.  Debt  payments 
and  state  taxes  certainly  could  not  be  changed  at 
will,  however  independent  were  the  board  of  esti- 
mate. There  is  ample  opportunity,  in  the  two- 
fifths  of  the  budget  where  the  expenditures  are 
not  fixed,  for  that  body  to  show  its  economy  and 
appreciation  of  respective  needs. 

In  addition  to  these  recurrent  fixed  sums,  no 
year  passes  in  which  the  legislature  does  not  re- 
quire the  city  to  appropriate  money  for  special 
purposes.  Various  public  works  are  made  manda- 
tory, and,  not  infrequently,  more  or  less  doubtful 
claims  upon  the  treas-ury  are  enforced  by  legis- 
lative act.  Judgments  against  the  city  must,  of 
course,  also  be  paid.  But  these  special  items  are, 
at  present,  seldom  of  large  amount. 

Besides  the  positive  requirements  of  law  regard- 
ing the  budget,  there  are  a  number  of  limitations 
and  prohibitions,  which  are,  however,  of  less  im- 
portance. Thus  the  city  may  not  appropriate 
moneys  to  sectarian  schools  or,  without  legislative 
act,  to  a  private  institution  of  any  sort  not  receiv- 
ing its  aid  in  1874;  the  amount  to  be  paid  on  the 
appropriation  account  in  any  year  for  street  repav- 
ing  is  limited  to  $500,000,  and  that  for  laying  new 
water  mains  to  $250,000;  and  there  are  a  number 
of  minor  restrictions.^ 

1  Consolidation  Act,  §§  194,  195. 


264       THE  BUDGET  AND   CITY  EXPENDITURES 

In  both  its  commands  and  its  prohibitions  re- 
garding the  expenditures  of  the  city,  the  Greater 
New  York  charter  varies  Httle  in  principle  from 
the  previous  law. 

§  45.  Procedure  of  the  Board  of  Estimate  and 
Appo  rtio  n  ni  en  t. 

If  the  aldermen  have  heretofore  given  but  a 
single  session  annually  to  the  appropriations,  it 
cannot  be  charged  that  the  board  of  estimate  be- 
stows on  them  equally  little  study.  To  be  sure,  less 
time  is  perhaps  devoted  to  the  budget  than  a  foreign 
parliament  or  the  legislature  of  one  of  our  states 
(counting  in  the  committee  work)  would  give  to 
considering  appropriations  correspondingly  large ; 
but  the  margin  of  discretionary  action  is  probably 
narrower  in  the  city,  and  besides  a  compact  board 
can  act  more  rapidly  than  a  large  body.  Taking 
at  random  three  cases:  on  the  budget  of  1888, 
eight  sessions  of  the  board  were  devoted  to  the 
provisional,  nine  to  the  final  estimate ;  on  that  of 
1 89 1,  eleven  to  the  former,  and  fifteen  to  the  latter; 
on  that  of  1894,  five  and  eight,  respectively.^  The 
sessions  usually  begin  at  2  p.m. 

Before  the  board  begins  its  work,  a  preliminary 
study  of  the  departmental  estimates  is  made  by 
the  comptroller ;  and  an  outline  budget,  comparing 
the  demands  of  the  departments  with  the  sums 
allowed  in  the  preceding  year,  is  prepared.  The 
comptroller,  in  fact,  being  more  familiar  than  his 

^  Compiled  from  City  Recoi-d. 


PROCEDURE    OF  BOARD    OF  ESTIMATE      265 

colleagues  with  the  financial  affairs  of  the  city, 
has  in  many  respects  a  rather  preponderant  influ- 
ence in  the  board.  The  various  department  heads, 
naturally  enough,  request  usually  in  their  esti- 
mates somewhat  larger  sums  than  they  can  possi- 
bly hope  to  secure.  They  then  appear  before  the 
board  in  person  to  explain  the  purpose  of  in- 
creases sought,  and  to  hinder  as  far  as  possible 
reductions  in  their  estimates.  The  final  budget 
usually  appropriates  from  one  to  five  millions  less 
than  the  departments  demand.  In  recent  years 
the  reductions  made  by  the  board  of  estimate  have 
been  usually  larger  than  before,  but  their  amount 
has  fluctuated  less  than  formerly.^ 

As  has  been  already  said,  the  board  of  estimate 
has  felt  itself  little  bound  by  the  provisional  budget 
in  fixing  the  final  one.  More  and  more  the  real 
work  of  considering  the  appropriations  has  been 
deferred  till  the  December  sessions ;  in  fact,  the 
provisional  budget  has  come  to  serve  almost  no 
real  purpose  except  to  compel  a  prompt  beginning. 
This  disregard  of  the  evident  intention  of  the  law 
was  not  indeed  wholly  undesirable,  although,  as 
we  shall  see,  there  have  been  abuses  connected 
with  it.  Budgets  of  other  financial  powers  are 
often  not  voted  till  the  very  last  moment  —  some- 
times during  the  year  for  which  they  are  intended. 

1  See  Table  IV,  Appendix.  The  wide  difference  in  1886  was 
due  to  quite  exceptional  conditions;  it  was  supposed  tliat  many  ex- 
jjenditurcs  for  permanent  improvements  w  ould  have  to  be  met  from 
taxes  instead  of  from  bonds. 


266       THE  BUDGET  AND   CITY  EXPENDITURES 

During  the  two  months  between  the  adoption  of 
the  estimates,  new  needs,  often  new  necessities,  or 
new  opportunities  for  retrenchment,  naturally  ap- 
pear. For  the  first  few  years  (1875  to  1878)  of  the 
present  budget  system,  the  gradual  weeding  out  of 
the  wasteful  features  left  from  the  Ring  period 
enabled  reductions  in  the  final  as  compared  with 
the  provisional  estimate.  Since  then  the  final 
estimate  has,  with  three  exceptions  (1886,  1890,^ 
1892)  due  to  peculiar  circumstances,  been  larger 
than  the  other  by  sums  ranging  up  to  over  four 
millions  in  the  budget  of  1897,  but  oftener  more 
nearly  half  a  million. 

The  appropriations  as  voted  in  December  are 
frequently  not  exactly  the  same  as  the  ultimate 
appropriations.^     After  the  adoption  of   the  final 

1  The  marked  decrease  in  1890  was  not  due  to  economy,  but 
connects  itself  with  part  of  the  large  increase  of  the  final  over  the 
provisional  estimate  in  1 89 1.  The  reduction  was  wholly  in  state 
taxes  {^Cily  Record^  1890,  p.  76),  a  portion  of  them  having  been 
contested  in  the  courts.  As  usual  in  such  suits  the  city  was  de- 
feated, but  the  board  of  estimate  in  1891  refused  in  the  provisional 
budget  to  appropriate  money  to  pay  the  judgment,  proposing  to 
carry  the  case  higher.  Mr.  Coleman  declared  his  colleagues  knew 
perfectly  well  that  the  attempt  was  useless,  that  they  were,  in  fact, 
trying  to  make  an  apparently  small  tax  rate  in  order  to  influence 
the  November  election.  (^New  York  Titnes,  November  I,  1890, 
p.  8.)  Whether  this  was  the  motive  or  not,  the  appropriation  for 
judgments  was  in  fact  increased  in  the  final  estimate  from  $100,000 
to  $750,000.  {City  Record,  1891,  p.  64.)  The  reduction  of  the 
final  estimate  in  1886  was  due  to  the  same  complication  regarding 
the  debt  limit  referred  to  on  the  next  page. 

2  Compare  Tables  I  and  IV,  Appendix. 


PROCEDURE    OF  BOARD    OF  ESTIMATE      267 

estimate  its  total  can  be  changed  only  by  special 
authority  from  the  legislature  ;  but  that  body  has 
in  fact  frequently  increased  the  budget  by  requiring 
the  payment  of  special  claims,  and  in  two  excep- 
tional cases  has  authorized  large  reductions.  In 
1886,^  after  the  court  decision  allowing  further 
contraction  of  debt,  an  act  authorized  the  removal 
of  several  large  items  from  the  budget ;  while  in 
1889^  the  law  readjusting  the  sinking  funds  made 
possible  a  reduction  of  over  two  and  a  half  mill- 
ions in  debt  charges.  Of  recent  years  it  has  been 
more  common  to  provide  for  special  expenditures 
authorized  by  the  legislature  by  means  of  revenue 
bonds  payable  in  the  year  following  their  issue. 

More  important  usually  than  these  changes  in 
the  gross  budget  are  the  transfers  made  within  it 
by  the  board  of  estimate  and  apportionment.  The 
charter  and  other  acts  of  1873^  restored  the  power 
to  transfer  unused  surpluses  of  appropriations, 
which  had  been  taken  away  after  the  abuses  of 
the  early  '6o's.  It  was  further  provided  that,  while 
unexpended  balances  of  appropriations  might  be 
carried  on  to  the  same  purposes  in  another  year, 
they  could,  if  not  needed  either  for  these  purposes 
or  for  transfers,  be  allowed  to  lapse  into  the  gen- 
eral fund.     But,  the  terms  of  these  statutes  being 

1  Seeposi,  p.  313.  2  Seeposi,  p.  316. 

^  Laws,  1873,  Chap.  757,  §  20.  The  restriction  that  such  trans- 
fers must  be  within  the  same  department  was  removed  in  1874, 
Chap.  308. 


268       THE  BUDGET  AND   CITY  EXPENDITURES 

somewhat  indefinite,  in  practice  balances  continued 
to  be  carried  forward  for  many  years  after  their 
original  objects  had  been  completed,  and  transfers 
from  these  old  remnants  of  appropriations  often 
constituted  a  serious  evil.  During  the  years  1881, 
1882,  and  1883,  the  abuse  became  specially  griev- 
ous,^ the  transfers  averaging  nearly  half  a  million 
each  year.  Balances  of  five,  ten,  or  even  more 
years'  standing  were  transferred  to  purposes  not 
only  utterly  foreign  to  their  original  end,  but  in 
themselves  often  objectionable.  Other  transfers, 
it  is  charged,  were  made  from  current  appropria- 
tions designedly  made  too  large.  Thomas  B. 
Asten,  the  only  Republican  on  the  board  of  esti- 
mate, declared  that  the  power  to  make  transfers 
by  majority  vote  merely  was  used  by  his  colleagues 
to  make  appropriations  for  purposes  which  he  had 
kept  out  of  the  regular  budget.  Finally  a  proposed 
transfer  which,  though  comparatively  small,  was 
particularly  flagrant,  led  a  taxpayer  to  seek  an 
injunction.  The  point  was  sustained,  the  court 
declaring  that  the  intent  of  the  somewhat  ambigu- 
ous laws  was  that  surpluses  of  appropriations  must 

1  See  New  York  Tribune,  February  13,  1884,  pp.  3,  4.  The 
transfers  to  and  within  the  department  of  public  works  were  spe- 
cially commented  upon.  The  appropriation  for  supplies  and  clean- 
ing of  public  offices  in  1881,  $63,500,  was  increased  $26,945  ^7 
transfers;  in  1882,  appropriations  $70,000,  transfers  $21,347;  1883, 
appropriations  $75,000,  transfers  $28,789.  Comp.  Rep.,  1881,  p. 
41 ;  1882,  p.  41;  1883,  p.  24.  Such  recurring  transfers  of  course 
point  to  hardly  legitimate  design. 


PROCEDURE    OF  BOARD    OF  ESTIMATE      269 

be  disposed  of  annually,  either  by  being  continued 
for  the  original  uncompleted  purpose,  or  by  being 
applied  to  some  purpose  then  actually  deficient,  or 
by  transfer  to  the  general  fund.^  Accordingly 
the  board  of  estimate  in  1884  transferred  to  that 
fund,  or,  in  other  words,  cancelled,  no  less  than 
$2,678,002  of  accumulated  balances,^  and  annually 
since  then  such  surpluses,  often  amounting  to  sev- 
eral hundred  thousand  dollars,  have  been  cancelled.^ 

It  is  possible  that  this  system  of  transfers  is  still 
occasionally  used  improperly,  but  if  so  the  abuses 
are  neither  frequent  nor  extensive.  Transfers  are 
indeed  often  numerous  within  certain  departments 
whose  functions  are  especially  contingent,  such 
as  those  of  public  works  and  street  cleaning ; 
but  the  gross  amount  involved  in  these  changes 
is  usually  not  very  large.  Transfers  from  one 
department  to  another  are  seldom  made  in  more 
than  four  or  five  cases  during  the  year,  and  to  an 
amount  hardly  ever  exceeding  $100,000  altogether. 
Despite  the  possibility  of  abuse,  it  is  doubtful  if 
the  rigidity  that  would  come  from  abolishing  the 
practice  would  not  be  a  considerably  greater  evil. 

§  46.  Character  and  Motives  of  the  Board  of 
Estimate  and  Apportionment. 

What  now  may  be  said  of  this  board  of  five 
members  which  controls   such  weighty  interests .'' 

1  Bird  z'.  The  Mayor,  t^t,  Ilun,  396.     -  City  Record,  1884,  p.  11 30. 
■*  The  largest  amount  was  in  1894,  $654,248.    Comp.  Rep.,  1894, 
p.  157. 


2/0      THE  BUDGET  AND   CITY  EXPENDITURES 

What  is  its  character  and  the  quality  of  its  work  ? 
What  influences  determine  its  action  ?  Unfortu- 
nately it  is  impossible  to  answer  fully  and  accu- 
rately. 

General  opinion  is  certainly,  for  the  most  part, 
fairly  favorable  as  to  the  character  and  work  of 
the  board.  It  never  meets  the  ridicule,  seldom  the 
denunciations,  so  freely  heaped  on  the  aldermen. 
Indeed  we  should  naturally  expect  this  superiority. 
In  the  first  place,  the  board  of  estimate  is  com- 
posed of  the  most  prominent  officials  of  the  city. 
Three  of  them  —  the  mayor,  comptroller,  and  presi- 
dent of  the  aldermen  —  are  chosen  directly  by  the 
people,  and  no  party  quite  dares  to  put  up  for 
these  positions  mere  ward  heelers.  Even  Tam- 
many Hall  has  given  the  city  some  well-respected 
members  of  the  board.  The  fact  that  all  its  mem- 
bers have  such  great  powers,  both  in  their  sepa- 
rate departments  and  as  an  appropriating  body, 
naturally  draws  to  it  a  higher  class  of  citizens 
than  seek  the  feeble  power  now  belonging  to  an 
alderman.  On  the  other  hand,  the  members  of 
the  board  itself  have  comparatively  little  direct 
interest  in  the  appropriations  ;  the  criticism  which 
was  so  pertinent  regarding  the  body  as  composed 
under  the  Tweed  charter  no  longer  applies  strongly. 
In  the  second  place,  its  peculiar  composition  tends 
to  prevent  the  domination  of  the  board  of  appor- 
tionment by  the  mayor,  as  well  as  to  hinder  the 
exclusive  and  unrestricted  control  of  any  one  po- 


CHARACTER    OF  BOARD    OF  ESTIMATE      2/1 

litical  party  over  it.  The  comptroller  and  presi- 
dent of  the  aldermen  are  largely  independent  of 
the  mayor,  the  former  especially,  by  his  three 
years'  term  and  by  his  greater  familiarity  with  the 
finances,  having  possibly  even  stronger  influence 
in  the  budget  than  the  chief  executive.  The  two 
officers  who  are  appointive  have  terms  of  four  and 
six  years,  respectively,  while  the  mayor  (under  the 
charter  of  1873)  holds  but  two  years.  There  is 
accordingly  no  chance  of  the  appropriating  board 
at  any  time  being  composed  of  mere  creatures  of 
the  mayor  then  in  office,  as  was  the  case  under 
the  Tweed  charter.  Moreover,  the  dominant  party 
in  the  city  has  not  had  such  continuous  possession 
of  the  government  as  to  secure  unmingled  control 
of  the  board  of  estimate ;  this  is  especially  due  to 
the  fact  that  the  two  wings  of  the  Democratic 
party  are  quite  as  completely  separated  in  muni- 
cipal politics  as  either  is  from  the  Republicans. 
Four  mayors  since  1870  have  been  elected  in  oppo- 
sition to  Tammany  Hall,^  and  four  more  by  union 
of  the  two  Democratic  branches.^  Hence  it  has 
come  about  that  the  only  time  when  the  board 
has  not  contained  at  least  one  member  avowedly 
opposed  to  Tammany  Hall  was  from  1889  to  1891, 
during  Mayor  Grant's  administration,  and  even  then 
Mr.  Coleman"^  was  far  from  being  a  strong  defender 

'  Ilavemeyer,  Cooper,  Grace  (second  term),  and  Strong. 
2  Ely,  Edson,  Grace  (first  term),  and  Hewitt. 
8  See  Neiv  York  Tribune,  May  10,  1885,  pp.  i  and  4.     See  also 
ante,  p.  266. 


272       THE  BUDGET  AMD   CITY  EXPENDITURES 

of  that  organization  or  from  readily  agreeing  with 
his  colleagues.  On  the  expiration  of  the  latter's 
term,  moreover,  Mayor  Grant  appointed  Mr.  E.  P. 
Barker,  a  Republican,  who  holds  office  till  the  end 
of  1897.1 

The  presence  of  members  of  different  parties  in 
the  board  of  estimate  is  a  material  safeguard,  not 
only  because  unanimous  action  is  necessary  upon 
the  gross  appropriation,  but  quite  as  much  because, 
by  the  familiarity  of  members  of  the  minority  with 
the  administrative  details,  they  are  able  to  prevent 
actions  that  are  fraudulent  even  when  agreed  upon 
by  the  other  members.  Such  high-handed  pro- 
cedure as  that  of  the  board  when  the  four  chief 
Tweed  Ring  conspirators  composed  it  would  be 
quite  impossible  now.  It  is,  to  be  sure,  true  that, 
in  matters  of  expediency  or  policy,  the  minority 
can  hardly  force  the  majority  to  agree  with  it  as 
to  details ;  an  ordinary  vote  is  sufficient  to  decide 
these,  and  the  necessity  that  some  appropriations 
shall  be  made  often  compels  the  signature  of  the 
budget  by  the  minority  members  even  when  they 
strongly  oppose  certain  features.  But  the  power 
of  restriction  is  still  very  real.  The  complaint  of 
Mr.  Asten  in  1884,  concerning  the  evasion  of  his 
vote  by  the  device  of  transferring  balances  of  ap- 
propriations, shows  that  his  single  voice  had  been 
of  great  weight  in  the  original  budgets. 

'  Nezu  York  Tribune,  May  3,  189 1,  p.  3.  Comptrollers  (Jreen, 
Campbell,  and  Loew  were  also  County  Democrats. 


CHARACTER    OF  BOARD    OF  ESTIMATE      2/3 

We  may  conclude  then  from  the  composition  of 
the  board  of  estimate  that  we  must  not  look  too 
confidently  for  traces  of  personal  or  party  influ- 
ences in  fixing  the  city  expenditures ;  yet  we  can- 
not but  believe,  even  with  little  specific  proof  from 
the  meagre  records  of  the  board,  that  the  appro- 
priations are  often  materially  affected  by  such 
influences.  In  spite  of  the  impossibility  of  dicta- 
tion by  the  mayor,  nevertheless  when  from  time 
to  time  a  general  change  in  popular  sentiment 
occurs  and  makes  itself  felt  in  the  election  of  a 
chief  executive,  there  cannot  fail  to  be  a  consider- 
able change  in  the  whole  spirit  of  the  government, 
which  will  naturally  extend  to  the  appropriations. 
In  spite  of  the  great  power  held  by  a  minority, 
even  of  one,  in  the  board  of  estimate,  the  dominant 
party  must  at  times  use  the  budget  as  a  political 
engine.  There  are  often  strong  party  differences 
among  the  departments,  or  between  certain  depart- 
ments and  the  mayor ;  and  the  control  of  the  ap- 
propriations can  hardly  escape  being  occasionally 
employed  to  favor  a  political  friend  or  to  punish 
a  political  foe.  So,  too,  we  should  expect  that  the 
departments  whose  patronage  counts  most  from 
the  party  standpoint  would  be  sometimes  favored 
at  the  expense  of  others.  That  all  these  evils 
do  actually  occur  is  vouched  for  by  those  most 
familiar  with  the  inner  working  of  the  finances. 

But  in  seeking  direct  proof  of  these  facts 
in   records,  we    encounter    great    difficulty.      The 

T 


2/4       THE  BUDGET  AND   CITY  EXPENDITURES 

minutes  of  the  proceedings  of  the  board  of  esti- 
mate, to  which  we  might  look  to  ascertain  dif- 
ferences of  opinion  between  its  members,  give 
practically  no  light,  since  formal  aye  and  nay 
votes  are  seldom  taken  concerning  details,  nearly 
all  decisions  being  reached  informally.  Where 
such  votes  do  occasionally  appear,  the  only  indi- 
cation of  motive  they  apparently  afford  is  that  the 
president  of  the  aldermen  is  often  inclined  to  urge 
the  more  extravagant  appropriations  favored  by 
the  body  which  he  represents.  We  are  thrown 
back  upon  a  comparison  of  the  fluctuations  in  the 
figures  of  the  budget  from  year  to  year,  a  com- 
parison attended  by  many  difficulties.  In  the 
first  place  it  is  to  be  borne  in  mind  that  the  bud- 
get is  voted  before  the  beginning  of  the  official 
year,  and  that  an  incoming  mayor  has  no  part  in 
determining  the  appropriations  for  the  first  year 
of  his  term,  while  when  going  out  he  votes  upon 
those  for  his  successor.^  Moreover  the  only  just 
basis  of  comparison  between  gross  budgets  is  the 
amount  appropriated  for  running  or  contingent 
expenses,  exclusive  of  the  fixed  outlay  for  state 
taxes,  interest,  and  debt  redemption.  I  do  not 
mean  that  the  board  of  estimate  ought  not  to 
regard  fixed  charges  at  all  in  determining  the 
other  appropriations ;  their  weight  has  something 

1  The  mayor-elect  and  the  comptroller-elect  at  least  occasionally 
attend  the  meetings  of  the  board,  but  doubtless  more  to  become 
familiar  with  the  city  expenditure  than  to  give  advice. 


CHARACTER    OF  BOARD   OF  ESTIMATE       2/5 

to  do  with  deciding  how  much  more  burden  can 
be  added.  Yet  the  fluctuations  in  these  charges 
are  on  the  whole  gradual,  and  the  minor  changes 
from  year  to  year  do  not  and  should  not  con- 
siderably affect  other  appropriations.  It  is  better 
that  the  tax  rate  should  vary  moderately  than  that 
the  work  of  the  departments  should  be  embar- 
rassed by  frequent  changes  in  the  means  at  their 
disposal.  Above  all  we  must  remember  that  appro- 
priations of  equal  amount  in  different  years  may 
mean  the  widest  possible  difference  in  motives  and 
in  results  accomplished. 

Line  A  in  diagram  C  of  the  appendix  shows  the 
annual  appropriations  since  1873,  exclusive  of  state 
taxes  and  debt  charges.  The  two  fluctuations  that 
appear  most  significant  of  the  spirit  of  the  admin- 
istration are  the  rapid  increases  in  1888  and  1896, 
under  the  '  reform '  mayors,  Hewitt  and  Strong. 
Common  opinion  concerning  both  these  admin- 
istrations seems  to  be  that  they  stand  far  above 
the  average,  and  that  the  money  spent  was  not 
spent  altogether  in  extravagance.  In  the  former 
case  the  appropriations  for  the  years  immediately 
preceding  had  been  kept  exceptionally  low,  appar- 
ently under  the  influence  of  Mayor  Grace,  who 
seemed  specially  inclined  to  retrenchment.  In  the 
latter  case  the  preceding  budgets  had  been  reduced 
by  the  Tammany  administration,  in  its  general  pol- 
icy of  delusive  economy,  at  a  great  sacrifice  of 
efficiency ;  the  public  schools  especially  had  been 


2/6       THE  BUDGET  AND   CITY  EXPENDITURES 

seriously  crippled.  Too  much  stress  cannot  pos- 
sibly be  laid  on  the  fact  that  in  any  government 
mere  low  expenditure  is  no  evidence  in  itself  of 
true  economy.  The  argument  of  tax  rate  has  been 
used  by  politicians  till  it  is  threadbare.  Sometimes 
it  is  just ;  more  often,  perhaps,  unjust.  It  has  cer- 
tainly been  greatly  abused  in  the  metropolis,  espe- 
cially perhaps  by  the  Tammany  Democrats  in  the 
recent  memorable  campaign.  The  newspapers,  in 
commenting  on  city  expenditures,  too  often  fail 
to  go  below  the  surface  even  far  enough  to  make 
the  distinction  between  fixed  and  contingent  appro- 
priations which  we  have  found  necessary. 

It  might  at  first  blush  appear  likely  that  each 
administration  would  be  inclined  to  make  larger 
appropriations  for  the  year  in  which  it  has  the 
spending  of  them  than  for  the  year  when  its  suc- 
cessor is  in  office.  But  this  motive  is  naturally 
less  strong  when  the  same  party  continues  in 
power  successive  terms ;  and  even  when  the  chief 
of  the  administration  changes,  several  at  least  of 
the  department  heads  usually  remain  unchanged. 
It  seems  doubtful  if  the  final  budget  has  ever  been 
cut  down  for  the  purpose  of  hampering  a  successor. 
On  the  other  hand,  it  is  highly  probable  that  the 
pi-ovisional  estimates  have  at  times  been  reduced 
with  the  purpose  of  influencing  the  elections  before 
which  they  were  made  by  the  argument  of  tax  rate, 
the  final  budget  being  increased  after  the  election. 
Thus  the  final  estimates  made  by  the  Tammany 


BUDGET  SYSTEM  OF  GREATER  NEW   YORK     2  J  J 

administration  for  the  years  1891,  1893,  and  1895 
exceeded  the  provisional  estimates,  made  just  before 
the  municipal  elections  of  1890,  1892,  and  1894,  by 
the  sums  of  $1,360,555,  $923,146,  and  $1,277,367, 
respectively.^  The  excess  in  each  case  was  due 
chiefly,  not,  as  has  been  true  regarding  many  of 
-the  smaller  increases  in  other  years,  to  extraordi- 
nary and  unavoidable  new  items  coming  up  during 
the  interval  between  the  two  estimates,^  but  to  gen- 
eral increases  in  a  large  number  of  departments ; 
so  that  one  can  scarcely  avoid  the  suspicion  that  a 
partisan  motive  kept  down  the  provisional  esti- 
mates. Moreover,  this  motive  was  distinctly  attrib- 
uted to  his  colleagues  by  a  member  of  the  board  of 
estimate  itself,  as  regards  the  budget  of  1891.  The 
immense  increase  in  the  final  budget  for  1897,  as 
compared  with  the  provisional  one,  was  largely  due 
to  added  debt  payments,  but  there  were  also  addi- 
tions for  nearly  all  other  objects.  These  changes, 
however,  seem  hardly  due  to  political  motives. 

§  47.      The  Budget  System  of  Greater  Nezv  York. 

Though  we  have  just  seen  reason  to  believe  that 
the  board  of  estimate  and  apportionment  is  not 
altogether  free  from  evil  influences  and  motives, 
yet  it  has  been  so  much  superior  in  character  to 
the  city  council  that  most  of  New  York's  people 
have  been  quite  willing  to  leave  the  purse  in  its 
control,  rather  than  trust  it  to  some  worse  hand. 

1  City  Record,  1891,  p.  64  ;    1893,  p.  83  ;    1895,  p.  108. 

2  Ibid.,  1897,  p.  100. 


278       TFIE  BUDGET  AND   CITY  EXPENDITURES 

Nevertheless,  nearly  every  one  who  thinks  about 
the  matter  at  all  realizes  that  the  present  budget 
system  is  both  unusual  and  in  theory  unwarranted. 
In  no  other  city,  except  the  few  which  have  fol- 
lowed the  example  of  the  metropolis,  does  a  small 
board  of  executive  officers  have  the  final  appropri- 
ating power.  Shorn  of  other  authority  as  the  city 
council  has  often  been  elsewhere,  the  traditions  of 
representative  government  have  retained  for  it 
considerable  financial  control.  It  was  partly,  per- 
haps, because  the  Greater  New  York  charter  com- 
mission realized  the  special  anomaly  of  the  present 
practice,  and  partly  because  they  have,  in  general, 
sought  to  raise  the  '  municipal  assembly  '  from  its 
present  degradation,  that  they  proposed  to  restore 
to  our  city  fathers  some  real  power  in  the  appro- 
priations. In  the  impression,  perhaps,  that  they 
were  establishing  something  like  parliamentary  or 
cabinet  government,  they  have  left  the  framing  of 
the  budget  to  the  board  of  estimate  and  appor- 
tionment, and  have  given  the  council  power  only 
to  reduce  the  sums  proposed  by  the  smaller  body. 

It  seems  very  doubtful  whether  this  new  plan  will 
accomplish  all  that  is  expected  of  it.  In  fact  it  is 
still  an  anomaly,  still  a  mixture  of  systems.  We 
are  offered  in  no  sense  cabinet  government,  since 
the  board  of  estimate,  which  might  correspond  to 
the  cabinet,  is  not  chosen  from  the  council  nor  re- 
sponsible to  it ;  it  represents  in  no  way  a  policy  to 
which  the  council,  or  the  dominant  party  in  it,  is 


BUDGET  SYSTEM  OF  GREATER  NEW   YORK     279 

pledged.  In  a  cabinet  government  there  is  no  occa- 
sion for  the  legislative  body  to  propose  enterprises 
or  increase  expenditures  for  purposes  not  asked 
for  by  the  responsible  ministers  who  are  carrying 
out  its  will ;  but  the  same  does  not  hold  true  here. 
While  the  new  charter  makes  no  little  advance  by 
thus  restoring  to  the  council,  as  the  representative 
of  the  people  who  pay  the  taxes,  a  real  power  to 
limit  expenditure,  it  does  not  go  far  toward  bring- 
ing back  real  council  government  in  the  city. 

But,  it  may  be  interposed,  no  one  wishes  the 
council  to  govern  outside  its  sphere  as  a  purely 
legislative  body  and  as  the  guardian  of  the  purse. 
It  is  not  our  task  here  to  discuss  fully  the  general 
question  of  the  relations  between  powers  in  city 
government.  There  can  be  no  doubt,  however, 
that  much  confusion  of  thought  has  arisen  from 
the  attempt  to  carry  into  municipal  politics  too 
rigid  a  distinction  between  executive  and  legis- 
lative functions,  which  cabinet  governments  show 
us  are  not  necessarily  sharply  sundered  even  in 
national  politics.  There  are  some  purely  legis- 
lative functions  in  city  government,  and  many 
purely  executive  ones,  but  there  are  not  a  few 
extremely  important  matters  which  occupy  a  mid- 
dle ground.  In  those  matters  where  the  city  is 
something  more  than  a  mere  agent  of  state  gov- 
ernment, where  its  action  more  nearly  resembles 
that  of  a  private  corporation,  many  broad  ques- 
tions of  expediency  or  policy  must  arise  —  ques- 


28o      THE  BUDGET  AND   CITY  EXPENDITURES 

tions  similar  to  those  which  the  directors  of  a 
great  railway  or  mining  company  have  to  deter- 
mine. These  general  matters  —  the  inauguration 
of  public  works,  the  establishment  of  parks,  and 
many  others  —  ought  surely  to  be  decided  by  a 
body  representing  the  people  as  nearly  as  possi- 
ble, by  a  body  sufficiently  large  to  feel  all  the  local 
needs  and  wishes  —  in  short,  by  the  city  council. 
The  council  ought  logically  to  be  not  merely  a 
restrictive  power,  not  merely  one  of  several  checks 
on  executive  officers.  It  ought,  subject  to  the 
advice  of  such  officers,  aided  by  information  from 
them  as  to  technical  details,  to  be  the  originator, 
the  policy  maker.  If  it  is  to  be  this,  it  must  have 
originating  power  in  the  budget  also,  since  nearly 
all  broad  municipal  problems  enter  here. 

To  increase  thus  the  power  of  the  city  legislat- 
ure would  be  by  no  means  to  go  as  far  in  the  way 
of  executive  control  by  the  council  as  was  formerly 
the  practice  of  New  York,  or  as  is  now  the  success- 
ful practice  in  England.  Just  where  the  limit  of 
the  council's  functions  shall  be  drawn  is  a  matter 
of  expediency  perhaps  more  than  of  theory.  No 
sharp  line,  certainly,  can  be  found  laid  down  by 
general  principles.  But  that  the  city  council 
should  be  the  chief,  and  not  a  merely  subordi- 
nate or  coordinate,  factor  in  determining  the  city 
budget  seems  to  be  a  proposition  defended  by 
reason  as  well  as  by  precedent.  The  scarcely 
fortunate  experience  of  New  York  city,  during  the 


THE    TILDEN  COMMISSION  PLAN  28 1 

days  when  the  council  actually  held  the  purse,  can- 
not be  used  as  a  conclusive  argument  in  opposi- 
tion, for  the  whole  budget  system  was  then  in  its 
infancy.  The  chief  objection  to  giving  power  of 
any  kind  to  the  council  in  New  York  has  been  its 
proverbial  corruptness.  But  a  large  part  of  the 
people  have  at  last  come  to  believe  that  the  only 
hope  of  improving  our  city  legislators  is  to  increase 
their  power,  and  to  make  their  office  one  worth 
having.  With  the  new  civic  spirit  which  has  been 
shown  of  late  years,  with  the  added  authority  which 
the  consolidation  of  the  great  metropolis  will  give, 
there  would  surely  be  hope  that  much  better  citi- 
zens might  be  secured  in  a  municipal  assembly  of 
proper  dignity  and  power,  than  have  ever  sat  in 
the  powerless  city  council.  The  charter  commis- 
sion has  promised  us  this  change,  but  it  seems 
likely  that  they  have  made  an  error  in  not  giving 
any  substantial  increase  of  authority  to  the  city 
legislature.  The  new  powers  nominally  bestowed 
upon  it  are  subject  to  quite  as  many  restrictions 
in  other  directions  as  in  the  budget.  Even  with 
some  added  grants  of  authority  upon  the  statute 
book,  the  force  of  custom,  if  nothing  else,  will 
tend,  almost  inevitably,  to  keep  the  council  far 
inferior  to  the  board  of  estimate  and  apportion- 
ment as  a  factor  in  municipal  affairs. 

§  48.    TJie  Tildcn  Couimissioii  Plan. 

Although  it  is  perhaj^s  no  longer  a  question  of 
practical  politics,  the  plan  of  financial  control  pro- 


282       THE  BUDGET  AND  CITY  EXPENDITURES 

posed  by  the  Tilden  commission  on  city  govern- 
ment, in  1877,  has  attracted  so  much  attention  that 
it  demands  mention.^  It  was  in  brief  that  general 
and  detailed  power  over  the  city  revenues  and 
expenditures  should  be  given  exclusively  to  a 
'board  of  finance,'  composed  of  from  six  to  fif- 
teen members  according  to  the  size  of  the  city, 
and  elected  by  citizens  paying  taxes  on  a  valuation 
of  $500  or  paying  rent  of  ^250  yearly.  This 
scheme  has  still  many  advocates,  and  strong  argu- 
ments are  adduced  in  its  favor.  Quite  aside,  how- 
ever, from  the  practical  difficulty  of  ever  securing 
an  amendment  to  the  state  constitution  restricting 
the  suffrage  in  this  way,  there  are  doubts  as  to  its 
justice  and  expediency.^  It  is  certainly  no  wonder 
that  the  middle  and  upper  classes  revolt  against 
the  domination  of  the  corrupt  bosses  who  draw 
their  support  largely  from  the  multitudes  of  igno- 
rant, poor,  and  largely  foreign  voters  in  our  great 
cities.  The  administration  of  a  board  thus  con- 
stituted might  perhaps,  for  the  time  being,  be  an 

1  Assembly  Documents,  1877,  No.  68. 

■^  For  a  much  fuller  and  more  conclusive  criticism  of  this  whole 
plan,  see  Professor  H.C.  Adams' /"//i^Z/V  Z>^^A,  chapter  on  Municipal 
Debts.  It  is  indeed  true  that  at  present  in  many  of  our  smaller 
cities  and  villages  there  are  provisions  for  elections,  at  which 
only  taxpayers  may  vote,  on  the  question  of  raising  taxes  beyond 
the  ordinary  limit,  or  of  borrowing  money.  But  even  here  the 
authorities  who  submit  the  question  and  who  oversee  the  spending 
of  the  money  are  elected  by  general  vote,  and  the  matter  is  quite 
different  from  putting  the  entire  control  of  city  expenditures  in  the 
hands  of  a  body  representing  only  property  owners. 


THE    TILDE. Y  COMMISSION  PLAN  283 

improvement,  but  there  would  be  a  constant  danger 
of  disregarding  the  interests  of  the  small  taxpayers 
and  the  non-taxpayers.  And  whatever  may  be 
said,  these  classes  really  contribute  a  very  large 
share  to  support  the  city,  and  are  thereby  enti- 
tled to  a  voice  in  controlling  disbursements.  Not 
merely  is  a  material  proportion  of  taxes  shifted 
directly  upon  the  poor  by  increasing  their  rents ;  ^ 
indirectly  also  more  still  is  laid  upon  them  by  re- 
duction of  wages  and  increase  of  prices.  Even  if 
this  were  not  the  case,  the  argument  that  the  city 
is  in  every  way  analogous  to  a  business  corpora- 
tion and  should  be  governed  by  those  who  pay  is 
far  from  sound.  A  city  is  a  place  of  residence,  in 
which  countless  numbers  of  citizens  who,  under 
present  social  conditions,  cannot  acquire  taxable 
property  to  any  considerable  extent,  are  practically 
compelled  to  live.  Without  them  the  industries 
which  make  up  the  city  would  not  exist  at  all. 
Non-taxpayers  are  part  of  the  great  municipal 
family,  every  detail  of  the  municipal  housekeeping 
affects  them  most  vitally.  They  ought  surely  to 
have  some  voice  in  its  management,  and  under  the 
plan  proposed  by  the  Tilden  commission  they  would 
have  practically  none.  If  taxpayers  wish  to  own 
the  city  and  to  manage  it  in  their  sole  interest,  they 
might  try  excluding  all  others  from  its  limits. 

While   admitting  its  injustice  from  an  abstract 
standpoint,   some    have    advocated    the    restricted 

1  See  Selignian,  Shifting  and  Incidence  of  Taxation. 


284       THE  BUDGET  AA'D   CITY  EXFENDITURES 

suffrage  on  grounds  of  practical  expediency,  for 
the  good  of  the  exchided  as  well  as  that  of  the 
other  citizens.  Any  argument  in  behalf  of  this 
position  based  on  the  experience  of  the  early  days, 
when  such  a  system  prevailed  in  the  city,  loses 
most  if  not  all  its  weight  on  account  of  the  wide 
difference  in  conditions.  The  same  may  be  said 
regarding  arguments  from  the  experience  of  for- 
eign municipalities  with  limited  suffrage.  In  Great 
Britain  the  qualification  required  —  payment  of  an 
annual  rental  of  ^10 — is  very  much  lower  than 
was  proposed  in  New  York  ($250).  It  has  already 
been  forcibly  pointed  out  by  the  Pennsylvania 
commission  which  studied  this  same  question,  that 
so  high  a  requirement  as  was  suggested  by  the 
Tilden  commission  would  probably  shut  out  many 
really  intelligent  and  worthy  citizens.  In  Ger- 
many every  citizen  has  some  voice  in  the  elec- 
tion of  the  municipal  council  (which  controls  the 
finances),  although  the  wealthier  classes  choose 
more  representatives  proportionally  than  do  the 
poorer.  It  may  fairly  be  questioned  whether  the 
excellence  of  city  governments  in  these  two  coun- 
tries may  be  attributed  so  much  to  the  restricted 
suffrage  as  to  the  general  traditions  and  character 
of  the  people,  who  have  a  reverence  for  govern- 
ment quite  unknown  to  Americans.  In  Germany, 
at  least,  the  preference  of  property  has  not  been 
without  evil  results  ;  the  jioor  have  often  received 
less  benefit  than   they  should   from   city  expendi- 


ANALYSIS   OF  CITY  EXPENDITURES        285 

tures  and  have  been  made  to  bear  more  than  a 
just  share  of  city  taxes.  Moreover,  even  if  our 
municipal  administration  should  be  temporarily- 
improved  by  a  property  qualification  for  voting, 
might  not  the  policy  be  injurious,  in  the  long  run, 
to  the  welfare  of  society,  by  checking  growth  in 
civic  knowledge  and  devotion  on  the  part  of  the 
non-voters  ?  The  ultimate  hope  for  good  govern- 
ment must  be  in  uplifting  the  mass  of  citizens,  the 
poor  as  well  as  the  rich,  and  though  its  effects  at 
times  seem  slow,  the  ballot  is  a  great  educator. 

§  49.    Analysis  of  City  Expenditures. 

The  net  total  of  actual  annual  outlay  is  not 
given  in  the  comptrollers'  reports.  The  gross  ex- 
penditures on  the  regular  budget  account  only, 
amounting  to  $45,621,094  in  1896,  are  the  figures 
usually  cited  ;  but,  as  was  explained  in  §  33,  by  no 
means  all  city  income  and  outlay  is  covered  by  the 
budget.  In  seeking  this  net  total  it  is  perhaps 
best  to  disregard  certain  minor  recurrent  expendi- 
tures, under  the  head  of  'special  and  trust  ac- 
counts,' such  as  those  for  teachers'  pensions  and 
the  like,  where  the  city  practically  acts  only  as  an 
agent  for  collecting  and  disbursing  moneys.  We 
may,  however,  properly  include  with  the  city's  ex- 
penditures the  amount  paid  on  street  enterprises 
destined  to  be  repaid  by  special  assessments,  since 
such  assessments  arc  in  a  sense  only  a  form  of 
taxation;  the  amount  thus  spent  in  1896,  after 
deducting  a  transfer  of  $250,000  from  the  budget. 


286       THE  BUDGET  AND   CITY  EXPENDITURES 

was  $4,261,649.  We  must  also  add  the  amount 
appropriated,  from  the  receipts  of  excise  licenses, 
to  charitable  institutions  and  to  the  police  and  fire- 
men's pension  funds,^  $1,262,853.  The  small  sum 
paid  from  the  interest  fund  directly  for  interest  on 
bonds  held  by  the  public,  $123,500,  is  a  current 
expenditure ;  while  the  amount  transferred  from 
this  fund  to  the  redemption  fund,  together  with 
the  amount  of  net  revenue  received  by  the  latter 
fund  from  sources  aside  from  the  appropriation 
account,  are  also  to  be  counted  as  so  much  outlay, 
since  practically  the  city  debt  is  reduced  by  the 
sums  thus  added  to  the  sinking  fund,  and  the 
revenues  so  pledged  are  withdrawn  from  use  to 
meet  other  expenditures.  This  net  addition  to  the 
redemption  fund  in  1896  was  $7,552,876.  Adding 
together  all  these  classes  of  outlay,  we  obtain  as 
the  total  expenditure  for  really  current  purposes 
in  1896  $58,821,973,  about  a  million  more  than  the 
revenue.  The  expenditures  of  Greater  New  York 
will  be  probably  not  less  than  eighty  millions 
yearly.^ 

In  classifying  these  annual  expenditures,  the 
broadest  lines  may  be  drawn,  as  already  suggested, 
between  the  expenditure  for  state  taxes  —  not 
properly  belonging  with  the  city  budget  at  all  — 
and  for  unavoidable  debt  payments  on  the  one 
hand,  and  those  for  more  contingent  purposes  on 

^  Part  of  this  apparently  reimbursed  by  assessments  on  firemen. 
2  Corresponding  to  income;   see  ante,  p.  178. 


ANALYSIS    OF  CITY  EXPENDITURES         287 

the  other.  Of  the  total  outlay  for  1896,  $6,402,009 
was  for  state  taxes,  $16,232,875  for  the  debt  ser- 
vice, and  $36,187,088  (or  nearly  two-thirds)  for 
other  or  contingent  purposes.  $"/, 6^6,^)76  of  the 
debt  payments  and  $5,524,502  of  the  contingent 
payments  did  not  enter  into  the  budget  proper ; 
all  the  remaining  amounts  were  included  in  it. 

Confining  ourselves  now  to  the  budget  outlay 
proper,  in  accordance  with  ordinary  custom,  it 
will  be  more  satisfactory  to  use  the  figures  for 
the  original  appropriations  rather  than  those  for 
the  actual  payments  from  the  treasury,  since  the 
former  are  less  apt  to  fluctuate  from  exceptional 
causes.  The  appropriations  for  1896  may  be 
grouped,  following  in  part  the  classification  pro- 
posed by  Professor  Clow,  as  shown  on  the  follow- 
ing page. 

From  these  figures  it  will  be  seen  that,  excluding 
state  taxes,  the  largest  single  item  in  the  annual 
budget  is  that  for  maintaining  the  great  police 
force,  while  the  items  for  schools  and  for  interest 
on  the  city  debt  (practically  all  of  which  appears 
in  the  appropriations)  are  both  nearly  as  great. 
Each  of  these  three  heads  amounts  to  about  an 
eighth  of  the  total  budget.  Should  the  expendi- 
tures not  entering  the  regular  budget  be  added, 
the  largest  form  of  outlay  would  be  that  for  debt 
redemption,  more  than  ten  millions  in  1896,  and 
the  next  largest  that  for  public  works,  more  than 
eight  millions,  if  outlay  on  special  assessment  ac- 


288       THE  BUDGET  AND   CITY  EXPENDITURES 


Appropriations,  18961 


State  taxes 

General  administration  : 

Mayor 

$  26,000 

88,800 

316,400 

162,520 

65,000- 

27,500 

205,050 

515,294 
277,200 
125,000 
600,409 

%  6,402,009 

Council 

Finance  department 

Department  of  taxes  and  assessments 
Commissioners  of  accounts  .... 

Civil  service  commission 

Law  department 

Bureau  of  elections 

Printing,  stationery,  etc 

Judgments 

Miscellaneous 

2,409,173 

City  debt : 

5,566,597 
2,989,901 

Principal 

8.556.498 

Police 

5,925,410 
2,345,355 

519,508 
3,020,700 

265,000 

Fire  protection 

Health  department 

Street  cleaning 

Building  inspection 

12,075,974 

Public  convenience  and  welfare  : 
Public  works  (streets,    water,  build- 
ings, etc.)       

Parks  and  parkways 

Public  charities 

Donations  to  private  mstitutions    .     . 

4,133,530 
1,219,255 

1,543,417 
1,543,301 

8,459,504 

Public  justice : 

1,765,929 
475,999 
308,682 

Department  of  correction      .... 
Sheriff,  coroner,  and  register      .     .     . 

2,550,611 

Public  education  : 

Schools 

5,679,302 

150,000 

150,000 

63,500 

College  of  City  of  New  York     .     .     . 
Normal  college 

6,042,802 

Total  appropriations 

^46,496,571 

1  Original  appropriations,  City  Record,  January  14,  1896.     Some 
changes  were  made  during  year,  but  the  total  remained  the  same. 


GROWrn  OF  EXPENDITURES  SINCE  1871      289 

counts  be  included.  The  largest  group  of  strictly 
budget  expenditures  is  that  for  securing  '  public 
safety  and  health,'  including  in  one  sense  the  most 
fundamental  municipal  tasks;  but  by  counting  in 
the  outlay  for  assessment  enterprises,  the  group 
classed  as  '  public  convenience  and  welfare '  would 
be  made  fully  as  great. ^ 

§  50.    Groivth  of  Expenditures  since  1871. 

For  the  purpose  of  studying  the  progress  of  the 
yearly  expenditures  since  1871,  we  may  best  sim- 
plify matters  by  confining  ourselves  to  the  budget 
proper,  disregarding  special  assessment  enterprises 
partly  because  subject  to  excessive  fluctuations, 
and  also  debt  expenditures  on  the  sinking  fund 
accounts,  because  of  the  wide  changes  in  policy 
from  time  to  time.  The  classification  of  the  an- 
nual appropriations  into  those  for  absolutely  fixed 
purposes  —  state  taxes  and  debt  charges  —  and 
those  for  more  contingent  objects,  is  especially  im- 
portant for  comparing  different  years.  The  move- 
ments of  these  two  great  classes  since  1874  (they 
are  not  distinguishable  earlier)  are  shown  by  lines 
A  and  B  in  Diagram  C  of  the  Appendix.  Their 
rapid  divergence  from  the  practical  equality  of  1874 
is  very  striking.     While  contingent  appropriations, 

1  Comparison  of  the  relative  expenditures  for  different  purposes 
by  other  American  cities  is  practically  impossible  with  the  present 
methods  of  accounting  used.  The  census  figures  of  1890,  though 
very  uncertain,  show  in  general  a  considerable  degree  of  equality 
in  the  relative  distribution  of  expenditures  by  different  cities.  See 
vol.  on  Wealth,  p.  556.  See  also,  ante,  p.  179. 
u 


290       THE  BUDGET  AND   CITY  EXPENDITURES 

after  a  slight  fall  in  1875-8,  rapidly  rose,  fixed 
appropriations  were  reduced  by  1892  to  barely  one- 
half  of  their  amount  in  1874.  There  was  a  spe- 
cially remarkable  decrease  at  the  very  outset  in 
state  taxes,^  which  had  been  swollen  by  a  defi- 
ciency in  the  state  sinking  fund;  while  since  1875 
these  taxes  have  constituted  one  of  the  most  fluct- 
uating items  in  the  budget.  The  annual  interest 
charge  has  also  been  reduced  greatly  since  1877, 
when  it  was  no  less  than  nine  and  a  half  millions, 
and  constituted  more  than  a  third  of  the  appro- 
priations on  city  account.  The  reduction  has  been 
partly  due  to  the  actual  decrease  of  the  city  debt 
during  part  of  the  time,  but  more  to  a  gradual  fall 
in  the  average  rate  of  interest,  owing  to  the  pay- 
ment or  refunding  of  the  bonds  of  the  war  and 
Ring  periods  with  their  high  rates.  The  sudden 
decrease  in  interest  payments  in  1889  was  due  to 
a  change  in  the  law  regarding  the  sinking  fund, 
as  were  the  great  reductions  in  the  appropriations 
for  debt  redemption  in  1878  and  again  in  1889.^ 
The  rapid  rise  in  all  three  classes  of  fixed  appro- 
priations in  1896  was  responsible  for  two-thirds  of 
the  great  increase  of  the  gross  budget  as  com- 
pared with  the  preceding  year. 

Had  it  not  been  for  the  steady  decrease  in  fixed 
appropriations,  the  increase  in  contingent  appro- 

^  See  Diagram  D.     All  these  figures  are  compiled  from  comp- 
troller's reports. 
2  See  §§  53.  54. 


GROWTH  OF  EXPENDITURES  SINCE  187 1      29 1 

priations  since  1874  could  scarcely  have  been  so 
rapid.  Owing  to  that  decrease  the  total  budget 
was  kept  for  fully  fifteen  years  below  the  figure 
reached  in  1874  (except  in  1876),  although  the 
contingent  appropriations  rose,  meantime,  nearly 
40  per  cent.  The  only  breaks  in  the  upward 
movement  of  these  appropriations  were  in  1882 
and  1886,  in  the  economical,  not  to  say,  perhaps, 
parsimonious,  administrations  of  Mayor  Grace,  and 
specially  rapid  increases  in  expenditure  followed 
immediately  after  these  years.  The  unusual  rise 
in  1885  was  chiefly  due  to  the  payment  of  a  large 
judgment  for  water  meters  put  in  during  the  Ring 
period.  On  the  other  hand  the  steady  increase  of 
the  budget  since  1890  has  been  due  to  increases 
in  almost  every  department. 

Without  studying  in  detail  the  fluctuations  in  the 
items  of  expenditure,  a  general  glance  at  Diagram 
D  will  show  that  in  most  departments  the  growth 
during  the  past  quarter  century  has  been  fairly 
gradual,  corresponding  to  the  increase  of  population, 
although  for  the  most  part  at  a  more  rapid  pace. 
Sudden  variations,  due  to  exceptional  causes,  of 
course,  sometimes  appear.  The  progress  of  the 
various  appropriations  may  be  more  roughly  but 
more  easily  compared  by  means  of  percentages  or 
index  numbers,  showing  the  relative  amount  of 
the  chief  heads  at  decennial  periods,  1876,  1886, 
and  1896.  The  former  year,  which  is  taken  as  a 
basis  and  called  100,  marks  the  lowest  point  of  the 


292       THE  BUDGET  AND   CITY  EXPENDITURES 

expenditures  since  1871,  the  latter  their  highest 
point.  The  figures  following  may  be  more  clearly- 
appreciated  by  aid  of  Diagram  E  of  the  Appendix. 

Index  Numbers  showing  Growth  of  Appropriations 


1876 


1886 


1896 


Population  ^ 

Assessed  valuation 

Total  appropriations 

State  taxes,  interest,  and  redemption 

State  taxes 

Interest 

Redemption 

Contingent  appropriations  .... 

Police 

Education 

Public  works 

Fire  protection  and  building  inspec- 
tion   

Street  cleaning 

Charities  and  correction 

Public  parks  ^ 

Courts 

Donations  to  asylums,  etc 

All  other 


100 

ICO 

100 
100 
100 
100 
1 00 

700 

100 
100 
100 

100 
100 
100 
100 
100 
100 
100 


128 

97 
66 

58 
77 
42 

118 
107 
193 

149 
152 

133 
205 
III 

137 
138 


179.7 

181 

^ZZ 

79 

89 

58 

145 

igS.2 

176 

155 
228 

198 
416 
173 

374 
145 
17s 
203 


While  the  gross  budget  has  thus  grown  much 
less  rapidly  than  population  or  assessed  valuation, 
the  contingent  appropriations  have  increased  con- 

1  As  estimated  by  Board  of  Health. 

2  Including  certain  street  expenses.  The  separation  of  the  de- 
partment of  improvements  in  the  23d  and  24th  wards  is  so  recent 
that  it  is  disregarded. 


GROWTH  OF  EXPENDITURES  SINCE  187/      293 

siderably  faster  than  either — 95  per  cent  in  twenty 
years.  This  rapid  growth  is  not,  indeed,  in  itself 
a  ground  for  complaint.  It  is  the  common  expe- 
rience of  cities,  for  they  are  continually  under- 
taking new  tasks,  and  doing  more  proportionately 
for  their  citizens.  It  is  perfectly  conceivable  that, 
without  going  too  far  into  '  socialistic '  enterprises, 
New  York  might  still,  with  true  economy,  expend 
a  considerably  larger  proportion  of  the  people's 
income  in  collective  undertakings.  The  real  prob- 
lem is  to  secure  a  proper  return  for  money  spent, 
not  merely  to  cut  down  outlay.  Probably  no  un- 
biassed critic,  however,  would  maintain  that  the 
expenditures  of  the  metropolis  during  the  past  two 
decades  had  shown  marks  of  striking  economy  in 
any  sense  whatever. 

These  index  numbers  show,  further,  that  the 
forms  of  contingent  expenditure  which  have  in- 
creased less  rapidly,  during  the  period  since  the 
Ring,  than  population,  are  those  for  education, 
courts,  charities  and  correction,  and  donations  to 
institutions.  The  appropriations  for  schools,  in- 
deed, hardly  increased  at  all  for  many  years  ;  but 
this  was  accompanied  by  most  unfortunate  cur- 
tailment of  facilities,  and  especially  by  failure  to 
provide  sufficient  room.  The  rapid  growth  of  ap- 
propriations for  this  purpose,  under  the  adminis- 
tration of  Mayor  Strong,  cannot  fail  to  be  generally 
approved.  The  most  remarkable  increase  in  ex- 
penditure has  been  for  .street  cleaning,  till  recently 


294       THE  BUDGET  AND   CITY  EXPENDITURES 

the  least  satisfactorily  performed  of  all  municipal 
functions.  Though,  following"  the  advice  of  a 
special  committee  of  citizens,  larger  appropriations 
began  to  be  made  about  1891,  little  improvement 
was  accomplished  till  the  last  administration,  by 
still  greater  outlay  judiciously  employed,  worked 
a  revolution.  The  apparently  rapid  increase  in 
park  expenditures  is  partly  misleading,  being  due 
to  added  outlay  for  street  improvements  in  the 
upper  part  of  the  city,  under  charge  (till  very  re- 
cently) of  this  department.  The  department  of 
public  works  is  the  only  one  where  the  rate  of 
increase  in  expenditure  has  been  materially  less 
since  1886  than  before,  but  this  is  partly  due  to 
the  inclusion  of  so  much  street  work  under  the 
park  department. 


CHAPTER   XI 

THE    CITY    DEBT 

The  net  debt  of  New  York  city,  at  the  close  of 
1896,  was  more  than  double  that  of  Brooklyn, 
which,  in  turn,  was  considerably  greater  than  that 
of  any  other  American  city.  The  consolidated  city 
will,  at  the  outset,  have  an  indebtedness  equal  to 
five  times  that  of  Boston  —  the  next  most  heavily 
indebted  American  municipality,  —  to  one-fourth 
that  of  all  our  American  cities  combined,  and  to 
more  than  three-fourths  of  the  united  debts  of  all 
the  American  state  governments.  It  is  no  wonder 
that  the  people  of  the  metropolis  are  so  pro- 
foundly interested  in  their  city  debt,  which  will 
amount  to  about  $60  per  capita  in  the  greater  city. 
The  immense  burden  is  the  more  subject  to  unfa- 
vorable comment  because  no  small  part  of  it  rep- 
resents the  result  of  corruption  and  fraud ;  not 
only  is  the  legacy  of  the  Tweed  Ring  yet  largely 
unpaid,  but  considerable  mismanagement  has  at- 
tended many  of  the  debt  issues  since  that  time. 

The  study  of  the  city  debt  involves  a  consider- 
ation of  the  constitutional  limitations  upon  the 
issue  of  bonds,  the  control  of  the  legislature  over 
such  issues,  —  which  has  caused  so  much  complaint 

295 


296  THE    CITY  DEBT 

in  the  past,  and  which  the  Greater  New  York 
charter  promises  to  do  away  ahiiost  entirely,  — 
the  powers  of  local  authorities  as  to  the  creation 
of  debt,  the  complicated  provisions  for  meeting 
the  principal  and  interest  of  bonds,  and  finally  a 
brief  survey  of  the  actual  progress  of  the  debt  and 
of  the  chief  bond  issues  since  the  Ring  period. 

§  51.    Constitutional  Limitation  of  Debt. 

In  most  of  our  American  states  general  restric- 
tions of  some  sort  upon  the  borrowing  of  local 
bodies  have  been  established,  either  by  constitu- 
tional or  legislative  act,  during  the  past  thirty  or 
forty  years.  These  limitations  have  arisen  as  the 
result  of  experience  of  the  thoughtlessness  with 
which  our  'booming'  municipalities  are  apt  to  rush 
into  premature  public  works  or  to  incur  burdens 
for  posterity  to  meet."  It  is  for  the  interest  of  the 
state  as  a  whole,  and  of  every  subdivision  that  is 
likely  to  wish  to  borrow,  that  the  credit  of  every 
public  financial  unit  within  its  borders  should  be 
sound. 

The  first  constitutional  limitation  of  local  debt 
in  New  York,  adopted  in  1875,^  followed  the  ex- 
ample of  numerous  other  states  by  prohibiting  the 
loaning  of  public  credit  to  private  individuals  or 
corporations,  or  the  purchase  of  stock  in  corpora- 
tions by  municipalities  —  a  restriction  intended  to 
prevent  a  very  common  abuse,  especially  in  grant- 
ing bonuses  to  railways.     A  far  more  important 

1  Constitution  of  1846,  Art.  8,  §  11. 


CONSTITUriOA'AL  LIMITATION  OF  DEBT      2()7 

provision  was  inserted  in  the  constitution  in  1884, 
an  almost  unanimous  popular  vote  showing  how 
much  its  desirability  was  felt.  This  amendment, 
which  at  first  applied  only  to  cities  over  100,000, 
but  was  extended  by  the  revised  constitution  of 
1894^  to  all  counties  and  cities,  restricts  the  in- 
debtedness of  any  city  to  10  per  cent  of  the 
assessed  valuation  of  its  real  estate.  This  limit 
applies  to  assessment  bonds,  but  not  to  revenue 
bonds  issued  in  anticipation  of  taxes,  nor  to  stocks 
issued  after  the  adoption  of  the  amendment  for 
supplying  water,  but  such  stocks  must  be  payable 
within  twenty  years,  and  a  sinking  fund  for  them 
must  be  created  by  raising  annually  by  taxation 
the  necessary  proportion.  Such  water  debt  is  also 
to  be  counted  in  estimating  the  total  that  deter- 
mines whether  more  money  can  be  borrowed.  This 
10  per  cent  limit  is  higher  than  that  established  in 
almost  any  other  state,  but  usually  elsewhere  the 
percentage  restriction  applies  to  the  entire  assessed 
valuation,  not  merely  to  that  of  real  estate. 

This  amendment  of  1884  created  considerable 
commotion  in  New  York  city  finances.  The  real 
estate  valuation  of  the  city  was  then  $1,1 19,761,597, 
the  gross  bonded  debt  as  defined  in  the  constitu- 
tion, $126,871,138  ;2  and  the  city  would  be  unable 
for  many  years  to  borrow  money  except  for  water 
purposes,  unless  the  constitution  could  be  so  inter- 
preted that  the  large  sinking  fund  accumulations, 
1  Art.  8,  §  10.  -  Comp.  Rep.  1894,  p;).  142,  158. 


298  THE    CITY  DEBT 

then  $34,823,735,  could  be  subtracted  in  estimat- 
ing the  debt.  Mayor  Edson  held  with  the  cor- 
poration counsel  that  this  deduction  could  not  be 
made,  but  it  is  charged  that  he  took  this  posi- 
tion out  of  personal  or  political  opposition  to 
the  scheme  of  extensive  new  parks  beyond  the 
Harlem,  whose  opening  would  require  large  bond 
issues.  It  was  further  declared  at  first  that  Mayor 
Grace  took  the  same  stand  on  his  accession,  and 
for  the  same  reason,  but,  however  that  may  be, 
only  a  few  months  later  the  commissioners  of  the 
sinking  fund,  of  which  he  was  a  member,  decided 
to  construe  the  limitation  as  applying  only  to  the 
net  debt,  and  advertised  for  the  sale  of  $2,000,000 
of  dock  bonds.  Large  bondholders  at  once  .se- 
cured an  injunction  to  prevent  their  issue,  and  this 
remained  in  force  throughout  1885,  so  that  none 
but  water  bonds  were  issued.  In  1886  the  matter 
was  carried  to  the  court  of  appeals,  which  unani- 
mously reversed  the  lower  court. ^  The  opinion, 
which  was  by  Justice  Danforth,  dwelt  especially 
upon  the  purpose  and  nature  of  the  sinking  fund 
in  the  minds  of  its  founders  and  of  the  legislature. 
The  words  of  the  ordinance  of  1813  :  "  Whereas  it 
is  highly  useful  to  establish  a  fund  out  of  which 
purchases  of  the  New  York  city  stock  may  from 
time  to  time  be  made  .  .  .  whereby  .  .  .  the  re- 
demption of  the  same  will  be  regularly  progress- 
ing," and  other  connected  phrases,  were  held  to 

^  Bank  for  Savings  v.  Grace,  102  N.  V.,  p.  313. 


CONSTITUTIONAL  LIMITATION  OF  DEBT      299 

show  that  the  council  considered  such  j)urchases 
as  equivalent  to  redemption  ;  while  the  fact  that 
the  legislature  of  1873  had  authorized  the  cancel- 
lation of  such  stocks  held  by  the  fund  as  were 
redeemable  therefrom  was  also  cited.  Only  city 
bonds  being  held  by  the  sinking  fund,  it  was 
maintained  by  the  court  that  they  were  virtually 
redeemed,  and  that  the  "  constitutional  prohibi- 
tion ...  is  aimed  at  an  actual,  not  a  theoretical 
indebtedness." 

Under  this  decision  the  10  per  cent  limit  did  not 
for  a  decade  hamper  at  all  the  finances  of  the 
city.  The  net  debt  at  the  close  of  1896  was  only 
6|  per  cent  of  the  assessed  valuation  of  real  estate. 
The  court  decision  of  that  year,  however,  refus- 
ing to  approve  certain  plans  for  the  great  rapid 
transit  system,  on  the  ground  that  its  cost  would 
force  the  debt  beyond  the  legal  bound,  shows  that 
the  limitation  may  yet  have  some  direct  effect  in 
restricting  loans.  The  annexation  of  Brooklyn, 
whose  net  debt  already  stands  nearly  at  the  limit, 
will  narrow  the  margin  of  the  greater  city.  Per- 
haps wiser  forms  of  debt  restriction  might  be 
either,  as  has  been  done  in  a  number  of  states, 
to  set  one  limit,  subject  to  extension,  —  within  a 
second  limit,  if  desired,  —  whenever  a  popular  vote, 
perhaps  by  a  two-thirds  majority,  should  favor  it; 
or,  if  such  a  department  could  be  kept  free  from 
partisan  influences,  to  establish  a  state  board  of 
trained  officials  to  have   supervisory  control  over 


300  THE    CITY  DEBT 

the  management  of  municipal  debts,  in  some  such 
way  as  is  done  by  the  Local  Government  Board  in 
England.  A  combination  of  the  two  methods 
might  work  satisfactorily.  Certainly  a  city  of 
such  enormous  resources  and  such  future  pros- 
pects as  Greater  New  York,  has  little  to  fear  from 
the  accumulation  of  a  debt  considerably  larger 
than  the  present  one,  if  it  be  economically  applied 
for  wise  public  improvements,  and  especially  for 
such  as  are  likely  themselves  to  prove  a  source  of 
income.  Paris  has  a  city  debt  nearly  four  times 
as  great  as  that  of  New  York,  but  she  has  magnifi- 
cent public  works  to  show  for  it,  her  people  seem 
not  to  be  appalled  by  its  magnitude,  and  the  city 
credit  is  high.^ 

§  52.  Legislative  and  Local  Authorization  of 
Debt. 

Besides  the  general  constitutional  regulation,  the 
New  York  state  legislature  retained,  up  to  the 
enactment  of  the  charter  of  1897,  full  control  of 
the  purposes,  and  often  of  the  details  of  loans 
by  the  metropolis.  General  grants  of  borrowing 
power  were,  indeed,  made  for  a  few  regularly 
recurrent  purposes ;  for  example,  the  city  could 
issue,  without  special  laws,  revenue  and  assessment 
bonds  ;  dock  bonds,  not  over  $3,000,000  yearly  ; 
bonds  for  acquiring  new  lands  and  building  dams, 
etc.,  at  the  Croton  watershed,  and  for  a  few  less 

1  Shaw,  Municipal  Government  in  Continental  Eiirope,  pp. 
134  ff. 


AUTHORIZATION   OF  DEBT  30I 

important  objects.^  For  most  loans,  however, 
special  legislative  acts  were  required  ;  these  dif- 
fered widely  in  the  extent  of  their  regulation  over 
details.  In  many  cases  an  absolute  limit,  usually 
in  round  numbers,  has  been  placed  on  the  amount 
of  bonds ;  in  others,  as  with  the  new  aqueduct 
begun  in  1884,^  an  indefinite  sum  sufficient  to 
accomplish  the  enterprise  has  been  authorized. 
As  a  restrictive  agency  these  legislative  limits 
have  usually  been  of  little  or  no  significance. 
Bond  acts  really  desired  by  the  city  were  passed 
with  little  hesitation,  and  if  the  bounds  fixed  were 
too  narrow,  extensions  could  be  readily  secured. 
On  the  other  hand  the  legislature  has  often,  with 
quite  as  little  thought,  or  perhaps  with  partisan 
motives,  enacted  laws  requiring  the  creation  of 
debt,  at  the  instance  of  a  limited  number  of  citi- 
zens or  officials,  and  against  the  opposition  of  the 
most  representative  authorities  in  the  city.  Its  in- 
terference in  this  regard  has  indeed  been  the  sub- 
ject of  most  constant  and  bitter  complaint ;  nor  is 
it  easy  to  exaggerate  the  lack  of  consideration,  the 
ignorance  or  the  partisanship  with  which  our  legis- 
lators have  exercised  their  power  over  the  city's 
debt. 

The  comparatively  limited  degree  of  discretion- 
ary power  left  to  the  city  authorities  regarding 
debt  issues  has  been  considerably  divided  among 
different    boards    and    officers.      The   city   council 

'  Consoliclalioii  Act,  §§  132-162.        -  Laws,  1884,  Chap.  490. 


302  THE    CITY  DEBT 

long  since  lost  every  shade  of  control  over  indebt- 
edness ;  but  the  board  of  estimate  and  apportion- 
ment, with  its  growing  supremacy  concerning  other 
features  of  the  finances,  has  extended  its  power  in 
this  direction  also.  Loans  authorized  by  statute 
almost  always  require  the  order  of  some  local  body 
or  officer  before  the  comptroller  can  actually  issue 
bonds,  while  certain  details  as  to  the  term,  interest, 
and  form  of  bonds  are  usually  left  for  city  author- 
ities to  determine.  At  the  outset  the  board  of 
.estimate^  was  given  all  authority  over  these  mat- 
ters, except  such  as  was  specifically  conferred  on 
other  officers ;  but  these  exceptions  were  formerly 
rather  important,  both  in  the  charter  and  in  the 
special  bond  acts  themselves.  Thus  during  the 
Ring  period  the  commissioner  of  public  works  had 
obtained  the  right  to  authorize  several  classes  of 
bonds  without  other  consent ;  and  this  right  was 
retained  unchanged  till  1882,  as  regards  bonds  for 
improvements  at  the  source  of  water  supply,  where 
it  led,  according  to  the  charges  of  the  Union  League 
Club,  to  serious  evils. ^  In  the  latter  year,^  how- 
ever, the  board  of  estimate  secured  the  power  to 
approve  or  disapprove  the  requisitions  of  the 
commissioner.  Again,  the  commission  which  con- 
structed the  new  aqueduct  during  the  last  decade 
was  empowered  to  demand  the  issue  of  bonds  by 

1  Consolidation  Act,  §  204. 

2  Alleged  Frauds  in  the  City  Government,  1884,  p.  9. 
^  Consolidation  Act.  §  141. 


AUTFIORIZATIOX  OF  DEBT  303 

the  comptroller ;  but  here,  too,  the  board  of  esti- 
mate was  given  at  least  nominal  supervision  over 
the  enterprise  by  the  requirement  that  contracts 
and  various  other  acts  of  the  aqueduct  board 
should  be  submitted  to  its  approval.^  In  certain 
other  cases  departments  have  been  given  the  ini- 
tiative in  debt  creation,  but  subject  to  the  approval 
of  the  board  of  estimate  and  apportionment.^  The 
most  important  subtraction  from  the  control  of  this 
board  has  been  that  made  by  the  authority  given 
to  the  sinking  fund  commission,  only  two  of  whose 
five  members  belong  to  the  board  of  estimate.  ""^The 
commissioners  of  the  sinking  fund  still  possess 
sole  power  to  authorize  the  issue  of  dock  bonds, 
and  have  occasionally  been  given  charge  of  some 
other  specific  enterprise,  —  such  as  the  erection  of 
the  criminal  court  house  in  1887-93.^  To  them 
belong,  naturally,  certain  other  general  duties  of 
debt  management ;  they  approve  bids  for  the  sale 
of  bonds,  make  proper  provisions  for  payments, 
arrange  the  investments  of  the  sinking  fund,  etc. 
It  has  been  their  prerogative  also  to  declare  that 
any  given  class  of  stock  shall  be  free  from  city 
taxation,  which  has  been  the  usual  but  not  invari- 
able practice  since  it  was  rendered  possible  by  a  law 
of  1880*  and  by  a  general  ordinance  of  the  council. 

1  Laws,  1883,  Chap.  490. 

2  E.g.  board  of  education,  Laws,  1884,  Chap.  458;     1888,  Chap. 
136. 

3  Laws,  1887,  Chap.  371.  <  Ibid.,  1880,  Chap.  552. 


304  THE    CITY  DEBT 

While  some  of  the  details  of  debt  management 
have  been  left  unaltered  by  the  Greater  New  York 
charter,  the  general  provisions  as  to  the  authoriza- 
tion of  bonds  have  been  completely  reorganized, 
the  changes  made  being  considered  by  the  charter 
com.missiori  as  one  of  the  most  salient  features  of 
their  work.  In  widest  contrast  with  the  present 
necessity  of  constant  appeal  to  the  legislature  for 
authorization  of  bond  issues,  the  corporation  is 
hereafter  to  have  independent  power,  subject  to 
the  constitutional  limit  and  to  certain  requirements 
of  the  charter  itself  as  to  sinking  funds,  to  borrow 
money  for  any  public  enterprise.  Of  course  no 
provision  made  by  one  legislature  can  bind  its 
successors,  and  nothing  short  of  a  constitutional 
amendment  prohibiting  special  legislation  of  this 
sort  can  prevent  the  state  government  from  here- 
after enacting  laws  interfering  with  the  exercise  of 
this  power  by  the  city,  either  generally  or  as  to 
special  bond  issues ;  indeed,  acts  compelling  the 
city  to  borrow  against  its  will  may  perhaps  con- 
tinue to  be  passed  in  the  future,  as  so  often  before. 
Nevertheless,  this  provision  of  the  new  charter 
cannot  fail  to  have  a  powerful  moral  influence, 
and  it  will  doubtless  lead  ultimately  to  a  large 
measure  of  local  autonomy.  The  charter  commis- 
sion has  certainly  taken  a  long  step  in  advance. 

The  commissioners,  however,  felt,  perhaps  too 
strongly,  that  the  great  power  thus  granted  the 
city  might   lead  to  abuse,  and  they  have  accord- 


AUTHORIZATION   OF  DEBT  305 

ingly  required  the  consent  of  several  local  bodies 
to  authorize  loans.  It  is  expected  that  the  initia- 
tive in  enterprises  involving  bonds  will  ordinarily 
be  taken  by  the  board  of  public  improvements  — 
that  important  new  body  consisting  of  a  president 
and  ten  cx-officio  members,  including,  besides  other 
officers,  all  the  heads  of  departments  concerned 
with  public  works.  This  board  will  be  familiar 
with  the  technical  details,  and  can  intelligently 
advise  concerning  such  enterprises.  After  ap- 
proval by  the  board  of  improvements,  the  board  of 
estimate  and  apportionment  must  give  its  assent 
before  bonds  can  be  issued,  and  if  over  $100,000 
is  involved,  the  municipal  assembly  must  likewise 
approve.  In  case  any  measure  providing  for  a 
public  work  is  first  proposed  in  the  municipal 
assembly,  it  must,  before  final  action,  be  submitted 
to  the  board  of  improvements  for  a  report  es- 
timating the  cost,  etc.  In  default  of  a  favorable 
recommendation  from  this  board,  a  five-sixths  vote 
of  the  assembly  will  be  necessary  to  pass  the  ordi- 
nance. Four  bodies, — including  the  two  houses 
of  the  assembly,  —  each  in  its  general  powers  and 
dignity  nominally  of  very  high  standing,  will  thus 
have  a  mutually  restraining  control  over  the  crea- 
tion of  indebtedness.  There  seems  much  justice 
in  the  criticism  that  this  piecemealing  of  authority 
will  lead  to  deadlock,  or  will  prevent  proper  lo- 
cation of  responsibility.  Unless,  however,  some 
great  revolution   in  the  general  character  of    the 

X 


306  THE    CITY  DEBT 

aldermen  and  councilmen  takes  place,  they  are 
scarcely  likely  in  practice  to  have  as  much  weight 
in  debt  management  as  the  board  of  estimate  and 
apportionment,  which  will  have  the  advantage  of 
precedent  for  its  action  in  this  direction. 

§  53.    Debt  Redemption  —  Act  of  1878. 

If  the  legal  regulations  as  to  the  creation  of 
city  debt,  both  under  the  former  charter  and  under 
that  of  1897,  are  somewhat  complex  and  incon- 
sistent, those  regarding  its  redemption  are  yet 
more  so.  The  plan  of  setting  aside  for  the  ser- 
vice of  the  debt  certain  specific  kinds  of  revenues, 
and  especially  their  division  into  funds  for  interest 
and  for  redemption,  has  been  a  source  of  constant 
financial  entanglement.  The  ever  recurring  diffi- 
culty has  been  that  one  or  both  of  the  sinking 
funds  have  proved  more  than  sufficient  for  the 
purposes  to  which  they  were  limited  ;  while  only 
by  legislative  act  could  any  diversion  of  the  reve- 
nues be  made,  and  then  at  the  risk  of  charges  of 
violated  faith.  Simpler  methods  of  debt  service 
have  been  introduced  as  to  some  later  bond  issues, 
but  the  old  anomalies  have  been  at  the  same  time 
perpetuated  and  further  complicated. 

At  the  opening  of  the  financial  period  now 
under  consideration,  after  the  fall  of  the  Ring, 
the  debt  system  was  already  extremely  incon- 
sistent and  unwise.^  Only  a  small  amount  of 
interest  on  the  old  water  bonds  was  legally  pay- 

^  See  ante,  pp.  98,  149. 


DEBT  REDEMPTION  307 

able  from  the  interest  fund,  which  turned  a  sur- 
plus of  one  to  two  millions  yearly  into  the  general 
fund.  The  redemption  of  a  somewhat  larger 
amount  of  bonds  —  chiefly  for  water  and  parks  — 
had  been  charged  upon  the  redemption  fund,  but 
its  revenues  had  so  increased  that  the  accumula- 
tions were  going  on  at  evidently  double  or  treble 
the  necessary  rate.  Notwithstanding  the  super- 
fluity of  the  two  funds,  all  the  great  war  debt, 
and  nearly  all  of  the  immense  issues  of  the  period 
succeeding  the  war  and  of  the  Ring  7'egime,  had 
been  made  payable  principal  and  interest  from 
taxation.  So  far  as  the  interest  fund  was  con- 
cerned, this  arrangement  did  no  harm  further 
than  to  complicate  the  accounts,  since  the  surplus 
of  the  fund  went  to  the  same  fund  from  which 
general  appropriations,  including  those  for  inter- 
est, were  paid.  But  a  real  hardship  was  inflicted 
on  the  taxpayers  by  the  provision  as  to  the  re- 
demption fund,  since  they  were  being  compelled 
to  pay  from  annual  taxes  the  bonds  which  were 
now  constantly  falling  due,  at  the  very  moment 
when  revenues  which  should  be  available  for  the 
purpose  were  being  uselessly  heaped  up. 

No  change  in  this  unfortunate  system  was  made 
till  1878,  and  meantime  all  the  large  bond  issues 
of  the  post-Ring  period,  like  those  just  before, 
were  made  a  charge  on  general  appropriation 
account  and  not  on  the  sinking  funds.  By  the  lat- 
ter year  the  redemption   fund    had  risen  to  more 


308  THE    CITY  DEBT 

than  60  per  cent  in  excess  of  all  the  bonds  redeem- 
able from  it,  and  was  still  increasing  nearly  three 
millions  a  year.^  Worse  yet,  there  would  fall  due 
in  the  next  year  or  two  far  larger  amounts  of 
bonds  to  be  met  by  taxes  than  ever  before,  and,  as 
no  gradual  accumulation  had  been  made  to  meet 
these,  an  exceedingly  heavy  burden  threatened  to 
fall  on  the  overtaxed  people.  The  immense  float- 
ing assessment  debt,  moreover,  required  some  ad- 
justment, or  yet  more  severe  hardships  would  be 
incurred. 

Comptroller  John  Kelly  appears  to  have  been 
the  author  of  the  first  elaborate  scheme  for  solv- 
ing these  financial  difficulties.  He  proposed^  to 
make  the  redemption  fund  applicable  to  all  bonds 
then  outstanding,  except  revenue  bonds;  to  author- 
ize the  raising  by  taxation  of  not  over  $1,000,000 
in  any  year,  to  meet  stocks  falling  due  in  that  year 
for  which  the  fund  was  not  sufficient ;  and  to  allow 
the  city  to  refund  any  obligations  in  excess  of 
these  limits.  The  legislative  bill  containing  these 
provisions,  in  its  original  form,  was  vetoed  by 
Governor  Robinson,^  who  charged  that  practically 
no  greater  security  was  given  to  the  stocks  to  which 
the  sinking  fund  had  been  originally  pledged  than 
to  assessment  and  other  bonds   falling  due   long 

1  Debt  December  31,  1877,  payable  from  fund,  $18,762,043; 
amount  of  fund,  $31,080,007.      City  Record,  1S78,  p.  913. 

2  Assembly  Bill,  No.  166,  1878. 

2  Public  Papers  of  Governor  Robinson,  1878,  p.  41. 


DEBT  REDEMPTION  309 

before  these.  He  likewise  objected  to  further  post- 
ponement of  maturing  debt,  and  accordingly  urged 
that  $1,000,000  would  be  a  more  proper  minimum 
than  maximum  limit  to  be  levied  yearly  for  re- 
demption. The  bill  was  amended  somewhat  in  ac- 
cordance with  his  suggestions  and  became  a  law.^ 

It  is  strange  that  the  old  idea  that  by  pledging 
particular  revenues,  aside  from  taxes,  to  debt  re- 
demption, the  credit  of  the  city  would  be  improved,^ 
should  have  persisted  when  it  was  generally  (al- 
though indeed  wrongly)  supposed  to  be  evident 
that  such  revenues  would  no  longer  be  sufficient 
even  to  meet  the  existing  debt,  much  less  to  meet 
future  additions,  and  that  for  the  remainder  taxa- 

1  Laws,  1878,  Chap.  383. 

2  It  is  possible,  though  hardly  probable,  that  when  the  sinking 
fund  was  first  established,  one  of  the  reasons  for  its  character  may 
have  been  the  belief  that  the  payment  of  the  specific  revenues  set 
aside  could  be  enforced  by  mandatmis,  giving  thus  added  security 
to  creditors.  But  as  the  sinking  fund  ordinance  was  passed  after 
the  issue  of  the  bonds,  it  is  difficult  to  see  that  it  constituted  a  con- 
tract, or  that  a  maiidatnus  as  to  these  revenues  would  have  any 
more  force  than  a  general  one  ordering  payment.  At  any  rate  such 
an  argument  could  have  had  no  proper  weight  in  1878,  for  at  that 
time  the  custom  of  setting  aside  specific  revenues  was  at  least  uncom- 
mon in  other  municipalities,  while  the  courts  had  held  repeatedly  that 
holders  of  city  bonds  could  obtain  mandamus  to  compel  the  levy  of 
a  tax  to  pay  their  claims,  even  if  the  law  authorizing  the  bonds  had 
not  specifically  ordered  such  tax,  and  much  more  so  if  the  law  had 
prescribed  that  taxes  must  be  levied.  It  is  simply  inconceivable 
that  New  York  should  fail  to  pay  its  bonds  under  a  system  providing 
for  taxes  to  pay  them.  See  Dillon,  Municipal  Corporations,  ed.  4, 
§  849  ff. 


3IO  THE    CITY  DEBT 

tion  must  be  the  only  security.  The  opportunity 
lay  ready  to  hand  in  1878  of  adopting  a  simple 
and  rational  plan  of  debt  redemption.  All  that 
was  necessary  was  henceforth  to  turn  all  the  city's 
miscellaneous  revenues  into  the  general  or  appro- 
priation account;  and  taking  as  a  basis  those  ac- 
cumulations of  the  sinking  fund  not  required  for 
the  bonds  already  guaranteed  by  it,  to  add  thereto 
annually  from  the  appropriation  account  precisely 
such  sum  as  would  be  needed  to  amortize  the  rest 
of  the  debt.  No  holder  of  bonds  to  which  the 
sinking  fund  had  been  originally  pledged  could 
possibly  suffer  by  such  a  change. 

The  merit  of  the  plan  of  systematic  and  propor- 
tional debt  redemption  was  indeed  felt  by  the 
framers  of  the  act  of  1878,  and  it  was  provided 
that  for  all  bonds  thereafter  to  be  issued  a  sinking 
fund  must  be  accumulated  by  raising  a  fixed  an- 
nual proportion  out  of  taxes.  As  to  the  debt 
already  outstanding,  however,  the  old  system  was 
continued  with  new  and  complicated  adjustments. 
Owing  doubtless  less  to  a  fixed  policy  than  to  the 
anticipation  that  the  miscellaneous  revenues  would 
be  insufficient  to  meet  both  principal  and  interest 
of  the  existing  debt,  no  attempt  was  made  to 
increase  the  scope  of  the  interest  fund,  which  was 
still  to  be  applied  only  to  the  interest  on  old  water 
bonds.  With  characteristic  complication,  however, 
the  revenues  then  pledged  to  the  interest  fund  were 
left  under  that  name,  while  the  annual  surplus  of 


DEBT  REDEMPTION  311 

the  fund,  which  soon  would  be  fully  nine-tenths  of 
its  amount,  was  to  be  transferred  to  the  redemption 
fund,  to  augment  the  revenues  already  devoted  to 
it.  The  redemption  fund  thus  strengthened  was 
made  available  for  redeeming  any  bonds,  except 
revenue  bonds,  outstanding  at  the  date  of  the  law ; 
but,  in  accordance  with  the  suggestion  of  Gov- 
ernor Robinson,  an  emphatic  provision  was  in- 
serted that  no  such  payment  should  impair  the 
security  of  the  bonds  originally  chargeable  to  the 
fund,  which  were  declared  a  preferred  lien.  As 
the  sinking  fund  was  thus  enabled  to  pay  assess- 
ment bonds,  unpaid  assessments  on  the  proceed- 
ings for  which  these  bonds  were  issued  were 
pledged  to  it.  The  section  regarding  taxation  to 
cover  deficiencies  in  the  fund,  as  amended  after  the 
governor's  veto,  required  that,  whenever  the  com- 
missioners of  the  sinking  fund  should  certify  that 
it  would  be  insufficient  to  pay  stocks  due  in  the 
next  calendar  year,  the  city  should  levy  the  sum 
required ;  "  provided,  however,  that  the  amount 
so  to  be  raised  by  tax  and  paid  into  the  sinking 
fund  .  .  .  shall  not  in  any  one  year  be  less  than 
the  sum  of  one  million  dollars,  nor  more  than  two 
million  dollars." 

It  would  appear  a  very  free  interpretation  to 
treat  these  words  as  meaning  that  only  in  such 
years  as  the  sinking  fund  was  insufficient  to  pay 
the  then  actually  maturing  bonds  should  any  tax 
be   levied.     It    seems    rather   to    mean,   and   such 


312  THE    CITY  DEBT 

was  clearly  the  purpose  of  the  governor,  that  at 
least  $1,000,000  should  be  raised  every  year 
toward  the  principal  of  the  debt  outstanding  in 
1878;  yet,  doubtless  because  it  soon  became 
evident  that  the  reconstituted  sinking  fund  would 
be  more  than  able  to  meet  its  obligations,  unaided, 
this  provision  for  levying  taxes  to  supplement  it 
was  disregarded,  or  otherwise  interpreted.  In 
1879,  indeed,  precisely  one  million  was  inserted 
in  the  budget  for  redeeming  the  old  debt,  but  since 
that  year  practically  no  taxes  have  been  levied  to 
pay  debt  outstanding  at  the  time  this  law  was 
passed,  the  sums  that  have  actually  been  raised 
representing  the  proportion  required  annually  on 
stocks  issued  after  that  date,  together  with  sundry 
minor  payments  on  revenue  bonds,  etc. 

The  provision  for  issuing  consolidated  stock 
to  postpone  maturing  debt,  which,  in  spite  of 
Governor  Robinson's  objections,  was  still  retained 
in  the  law  q,s  adopted,  has  been  actually  made  use 
of  but  twice,  although  in  each  case  to  large  extent. 
The  most  immediate  purpose  of  this  provision  was 
to  enable  the  funding  of  the  large  amount  of  as- 
sessment bonds  that  fell  due  in  1878  and  1880; 
no  less  than  $9,700,000  of  fifty-year  bonds  were 
issued  for  this  purpose.  Again,  in  1896,  it  was  felt 
that  the  sinking  fund  would  be  unduly  depleted  if 
compelled  to  redeem  the  large  amount  of  Ring 
debt  then  maturing,  and  $8,377,000  of  refunding 
bonds  were  accordingly  issued.     These  refunding. 


DEBT  REDEMPTION  313 

Stocks  constitute  a  lien  on  the  sinking  fund  prior 
to  all  others  except  that  of  bonds  originally  secured 
by  it. 

The  important  features  of  this  law  of  1878  were, 
then,  the  practical  consolidation  of  the  interest  fund 
with  the  redemption  fund,  the  application  of  the 
latter  to  the  payment  of  all  funded  debt  tJicn  out- 
standings and  the  requirement  of  gradual  amortiza- 
tion out  of  taxes  for  future  bonds.  Awkward  as 
was  the  arrangement,  it  lightened  the  burdens  of 
taxpayers.  With  all  the  allowances  which  are 
necessary,  probably  this  act  made  the  annual  tax 
levy  for  the  following  decade  approximately  two 
millions  a  year  less  than  it  would  have  been  had 
the  old  debt  system  remained  in  force. 

For  some  time,  both  before  and  after  the  pas- 
sage of  the  act  just  described,  considerable  oppo- 
sition was  shown  against  the  whole  sinking  fund 
system,  and  especially  against  permitting  the  few 
men  controlling  it  to  retain  in  their  possession  un- 
cancelled such  vast  amounts  of  city  tonds.  The 
movement  went  so  far  that  Mr.  Theodore  Roose- 
velt even  introduced  at  Albany  a  bill  ^  requiring 
the  destruction  of  all  stocks  held  or  acquired  for 
the  sinking  fund,  but  providing  that  precisely  the 
same  sum  should  annually  be  paid  to  the  commis- 
sioners of  the  fund  as  the  interest  on  its  accumu- 
lations would  have  amounted  to.  If  this  provision 
were  faithfully  carried  out,  the  security  of  creditors 

1  Assembly  Bill,  No.  89,  1882. 


314  THE    CITY  DEBT 

would  be  exactly  the  same  as  before,  and  they 
could  not  justly  complain  of  ill-faith.  Able  stu- 
dents of  finance  have  approved  such  a  plan.  On 
the  other  hand,  as  was  explained  by  the  comp- 
troller,^  no  serious  danger  was  really  to  be  feared 
from  the  non-cancellation  of  bonds,  while,  from  lack 
of  clear  comprehension  of  the  change  of  policy, 
the  city's  credit  might  have  been  temporarily  im- 
paired, had  the  proposed  law  been  actually  passed. 
The  opposition^  which  the  comptroller  and  sink- 
ing fund  commissioners  had  shown  to  Mr.  Roose- 
velt's bill  seems  hardly  consistent,  for  in  the  same 
year,  1882,  a  large  number  of  bonds  were  actually 
cancelled  by  them.  The  circumstances  of  this 
action  were  these:  As  far  back  as  1873^  the  de- 
struction of  such  bonds  held  by  the  sinking  fund 
as  were  by  law  redeemable  therefrom  had  been 
authorized  by  the  legislature ;  but,  as  there  was  no 
provision  for  continuing  interest  payments  to  the 
fund  in  corresponding  amount,  the  local  financiers 
felt  that  to  act  under  this  authority  would  be  to 
break  faith  with  bondholders.  But  after  the  law 
of  1878,  which  required  the  transfer  of  the  entire 
surplus  of  the  interest  fund  to  the  redemption  fund, 
it  was  evident  that  precisely  the  same  sum  would 
be  turned  over  to  the  latter  fund  if  a  certain  amount 

1  Comp.  Rep.,  August,  1881,  p.  13. 

"^  Letter  to  Assembly  Committee  on  Cities,   City  Record,  1882, 
p.  619. 

3  Laws,  1873,  Chap.  335,  §  102. 


DEBT  REDEMPTION  315 

of  interest  now  being  paid,  from  the  interest  fund, 
upon  bonds  held  by  it  were  simply  stopped.  Ac- 
cordingly $6,030,972  of  bonds  held  by  the  redemp- 
tion fund,  upon  which  the  other  fund  was  paying 
interest,  were  cancelled  by  the  city  authorities  in 
1882.^  A  general  cancellation  of  sinking  fund 
bonds  was  again  proposed  in  1885,  under  stress 
of  the  constitutional  limit  on  debt ;  but,  as  the 
courts  soon  allowed  the  accumulations  of  the  fund 
to  be  deducted  in  estimating  the  limit,  the  measure 
was  not  pushed. 

§  54.    Debt  Redemption  inieler  Present  Laws. 

Barely  a  decade  was  the  act  of  1878  in  opera- 
tion before  new  legislative  '  tinkering '  of  the 
sinking  fund  became  necessary.  The  objection 
was  raised,^  with  some  reason,  that  no  change 
could  be  made  without  violating  the  contract 
which  that  law  had  declared  to  exist  between  the 
city  and  its  creditors ;  but  as  it  was  now  evident 
that  the  fund  would  soon  more  than  equal  all  the 
bonds  charged  to  it,  no  attempt  was  made  to  urge 
the  point  in  court.  As  usual  the  city  financiers 
had  underestimated  the  geometrical  increase  in 
the  sinking  fund  revenues,  and  needless  accumu- 
lations were  piling  up,  while  heavy  and  rapidly 
growing  sums  were  being  added  to  annual  taxes, 
as  required  by  law,  to  raise  the  proper  yearly  pro- 
portion of   bonds   issued  after   1878.     Already  in 

^  Comp.  Rep.,  August,  1882,  pp.  10-12;    December,  1882,  p.  11. 
^  E.g.  by  Mr.  Coleman,  New  York  I'iines,  November  i,  1890. 


3l6  THE    CITY  DEBT 

1888  the  tax  required  toward  the  debt  created  for 
the  new  aqueduct  —  subject  to  the  special  provi- 
sion of  the  constitutional  amendment  of  1884  — 
amounted  to  over  $800,000,  while  that  levied  to 
amortize  other  bonds  was  nearly  $700,000.^  Mean- 
while, during  the  ten  years  since  1878,  the  ordinary 
revenues  of  the  sinking  fund,  not  counting  the 
sums  contributed  by  taxation,  had  been  able,  with- 
out reducing  the  capital  of  the  fund,  to  pay  off 
about  40  per  cent  of  the  bonds  outstanding  in 
1878,  to  which  alone  they  were  applicable;  and 
with  the  progressive  increase  in  the  revenues,  it 
was  likely  that  accumulations  sufficient  to  cover 
the  entire  amount  of  these  bonds  would  be  made 
within  ten  or  twelve  years,  while  a  considerable 
portion  of  them  could  not  be  retired  till  well  into 
the  next  century. 

The  main  features  of  the  law  passed  in  1889^ 
to  relieve  this  situation  were  (i)  the  application 
of  the  sinking  fund  miscellaneous  revenues  to  the 
redemption  of  the  entire  city  debt,  present  and 
future  (except  the  water  debt,  where  the  constitu- 
tional amendment  of  1884  required  taxation  for 
the  sinking  fund),  instead  of  merely  to  bonds  out- 
standing in  1878;  and  (2)  the  stopping  of  interest 
on  the  accumulations  of  the  redemption  fund.  The 
sums  which  up  to  this  time  had  been  raised  from 
annual  taxes  for  amortizing  bonds  issued  since 
1878,  and  for  interest  on  bonds  held  by  the  sink- 

1  Comp.  Rep.,  1888,  p.  57.  -  Laws,  1889,  Chap.  178. 


DEBT  REDEMPTION  317 

ing  fund,  were  hereafter  to  be  removed  from  the 
budget.  A  provision  was  indeed  retained  requir- 
ing taxation  to  supplement  any  deficiency  in  the 
fund,  but  this  has  never  proved  necessary.  More- 
over the  second  change  was  not  made  in  the  bald 
way  in  which  it  has  just  been  stated,  but  the  fiction 
of  a  large  separate  interest  fund,  which  had  been 
kept  up  under  the  law  of  1878,  was  called  into 
play,  and  it  was  provided  that  the  entire  amount 
of  interest  on  stocks  held  by  the  redemption  fund 
should  be  paid  from  the  interest  fund  instead  of 
from  taxation.  In  other  words  the  same  revenues 
of  the  interest  fund,  which  under  the  law  of  1878 
had  gone  to  the  redemption  fund  as  'surplus,' 
were  now  to  go  to  it  as  interest,  and  a  corre- 
sponding annual  addition  to  the  fund  from  regular 
appropriations  was  to  be  discontinued. 

This  law,  as  an  immediate  effect,  reduced  the 
appropriation  of  1889  for  debt  redemption  from 
$2,269,842  to  $1,294,073  (the  latter  being  the 
amount  required  for  the  water  debt  under  the 
constitution),  and  that  for  interest  from  $7,129,048 
to  $5,728,772  ;  ^  and  similar  large  reductions  in  the 
burden  of  annual  taxation  have  resulted  each  year 
from  its  operation.  A  necessary  consequence  of 
the  measure  of  1889  was  the  separation  from  the 
sinking  fund  accumulations  in  general  of  those 
made  to  pay  the  water  stock  under  the  constitu- 
tional amendment  of   1884,  the  latter  stock  being 

1  Comp.  Rep.,  1889,  p.  84. 


3l8  THE    CITY  DEBT 

now  on  an  entirely  different  basis  of  redemption 
from  all  the  rest  of  the  city  debt.  There  became, 
accordingly,  two  redemption  funds,  the  larger 
being  designated  as  No.  i,  and  the  one  for  water 
bonds  as  No.  2. 

The  sinking  fund  provisions  of  the  new  charter 
of  1897  unfortunately  fail  to  simplify  the  finances, — 
indeed,  by  the  consolidation  with  other  municipali- 
ties some  new  complications  will  arise.  All  existing 
sinking  funds  of  each  municipality  are  continued, 
and  the  greater  city,  except  in  one  or  two  cases,  is 
to  carry  out  the  requirements  now  made  concern- 
ing them,  whether  by  raising  annual  taxes  or  set- 
ting aside  specific  revenues.  In  case,  however, 
all  the  water  bonds  of  the  various  subdivisions 
issued  since  1884  have  been  properly  provided  for 
according  to  the  constitutional  amendment  of  that 
date,  the  existing  sinking  funds  for  these  may 
be  consolidated,  and  water  bonds  hereafter  issued 
may  be  charged  to  the  same  fund.  For  all  other 
debt  hereafter  created  by  the  metropolis  there  is 
to  be  established  a  new  fund,  to  be  supplied  pri- 
marily from  annual  appropriations  raised  by  tax. 
When,  however,  the  bonds  charged  to  any  of  the 
present  sinking  funds  are  wholly  '  discharged, 
liquidated,  or  cancelled,'  the  specific  revenues  de- 
voted to  them  are  to  be  paid  to  the  newly  estab- 
lished fund.  This  provision  is  somewhat  vague, 
and  it  is  to  be  hoped  that  it  will  not  be  interpreted, 
in  connection  with  another  prohibiting  cancellation 


GENERAL   PROGRESS   OF   THE  DEBT        319 

of  sinking  fund  bonds  before  maturity,  so  as  to 
require  heaping  up  of  accumulations  after  the 
funds  have  fully  equalled  the  bonds  payable  from 
them,  but  before  such  bonds  are  due.  The  old 
sinking  fund  for  interest  is  continued  also,  its 
surplus  going  to  the  old  redemption  fund  as  at 
present. 

The  sinking  fund  of  Brooklyn,  which  will  now 
be  transferred  to  the  greater  city,  is  relatively  of 
very  small  amount,  and  is  increased  solely  by  an- 
nual taxes  levied  under  the  constitutional  amend- 
ment of  1884  and  under  certain  special  acts,  and 
by  interest  on  its  accumulations.  The  interest 
on  the  Brooklyn  water  debt  is  provided  for  en- 
tirely by  the  income  from  the  water  system,  which 
indeed  furnishes  a  small  surplus  to  the  general 
fund.i 

§  55.    General  Progress  of  tJie  Debt  since  1871. 

In  considering  the  general  movements  of  the 
city  debt  since  the  fall  of  the  Tweed  Ring,  three 
main  periods  may  be  distinguished:  from  1872  to 
1874,  from  1875  to  1884,  and  from  1885  onward. 
The  fluctuations  in  the  debt  may  best  be  studied 
by  means  of  Diagram  B.^     The  funded  indebted- 

1  See  Brooklyn  Comp.  Rep.,  1895,  PP-  '°3  ^-i  236  ff. 

2  The  diagram  (see  Appendix)  shows  only  the  resultant  of  issues 
and  redemptions.  The  following  table  giving  the  amounts  of  an- 
nual funded  loans  and  redemptions  will  aid  in  interpreting  the  dia- 
gram. Figures  before  1875  '^'^^  ""'  available  ;  others  are  compiled 
from  the  reports  of  the  commissioners  of  accounts  in    the   City 


320 


THE    CITY  DEBT 


ness  of  the  city  —  by  which  phrase  is  designated 
that  represented  by  long-time  bonds,  excluding 
revenue  and  assessment  bonds  —  increased  very 
rapidly  during  the  three  years'  of  the  first  period, 
almost  solely  on  account  of  the  funding  of  revenue 

Record,  and  from  comptroller's  reports,  from  year  to  year.  Both 
figures  for  1896  include  $8,377,000  of  bonds  refunded. 


Year 

Bonds  issued 

Bonds  redeemed 

1875 

$4,144,346 

$3,329,000 

1876 

5,244,734 

4,802,425 

1877 

3,523,624 

1,582,704 

1878 

8,379,182 

3,690,499 

1879 

1,832,673 

4,816,155 

1880 

4,406,251 

4,374,665 

1881 

2,996,500 

1,449,012 

1882 

2,791,961 

7,699,126 

1883 

2,654,783 

1,764,549 

1884 

5,193,081 

4,581,235 

1885 

4,950,000 

3,826,080 

1886 

3,875,845 

3,668,349 

1887 

11,912,154 

10,062,171 

1888 

7,857,215 

4,010,839 

1889 

14,819,132 

5,150,200 

1890 

8,878,294 

4,696,300 

1891 

6,957,346 

3,654,500 

1892 

8,070,116 

4,226,815 

1893 

9,853,927 

147,200 

1894 

10,486,041 

4,143,900 

1895 

13,669,828 

2,829,700 

1896 

24,378,827 

14,422,752 

Total  22  year 

s   .  $166,875,866 

$98,928,181 

GENERAL   PROGRESS    OE   THE  DEBT        32 1 

bonds  and  other  floating  obligations  bequeathed 
by  the  Ring.  In  the  decade  constituting  the  sec- 
ond period  there  was  a  relative  economy  of  bond 
issues ;  redemptions  nearly  kept  pace  with  them, 
while  the  sinking  fund  grew  largely,  notwithstand- 
ing these  payments,  thus  reducing  the  net  debt. 
Large  borrowing  was  indeed  almost  impossible, 
for  not  only  were  the  people  thoroughly  alarmed 
and  indignant  at  the  immense  burden  so  recently 
thrown  upon  them,  but  the  city  credit  was  such 
that  loans  could  be  placed  only  at  high  interest. 
On  two-thirds  of  the  immense  loans  from  1872  to 
1874,  7  per  cent  had  to  be  paid.  As  late  as 
1878  the  city  could  secure  no  better  rate  than  5 
per  cent  on  the  funding  bonds.  The  people  were 
therefore  little  inclined  to  borrow  further,  and  of 
the  forty-one  millions  of  new  loans  contracted  dur- 
ing the  decade  from  1875  to  1884  a  considerable 
part  were  unavoidable  refundings  of  old  obliga- 
tions. By  the  latter  year,  however,  the  situation 
had  much  improved :  the  net  debt,  which  had 
stood  at  fully  10  per  cent  of  the  assessed  valua- 
tion during  the  '70's,  was  reduced  to  less  than 
8  per  cent;  while  loans  could  now  be  floated  at 
3  per  cent  interest.  Accordingly  the  city  began 
to  borrow  largely  for  the  new  aqueduct  and  other 
long  postponed  public  improvements.  Since  1884, 
in  fact,  the  bond  issues,  $125,708,730,  have  been 
more  than  double  the  redemptions,  and  have  aver- 
aged over  twice  as   much   yearly   as   during    the 

Y 


322 


THE    CITY  DEBT 


preceding  ten  years.  Nevertheless,  the  sinking 
fund  has  increased  so  rapidly,  and  the  rate  of 
interest  has  been  reduced  so  greatly,  that  the 
amount  paid  from  the  budget  for  interest  was  only 
about  $5,500,000  in  1896  as  against  $9,500,000  in 
1876.  The  average  rate  of  interest  on  the  city 
debt  (weighted  according  to  the  amount  at  each 
rate)  fell  from  6.1  per  cent  in  1880  to  about  3.9 
per  cent  in  1895.^  This  remarkable  change  is 
partly  due  to  reduction  in  the  general  market  rate, 
but  shows  also  a  great  improvement  in  city  credit. 
It  is  a  matter  of  just  congratulation  to  New  York's 
financiers  that,  by  exempting  their  bonds  from 
local  taxation,  they  have  been  able  to  sell  at  par 
large  blocks  bearing  only  2\  per  cent  interest ; 
and  though  3|  was  the  rate  on  the  large  issues 
of  1896,  the  increase  was  due  solely  to  the  general 
political  and  financial  disturbance,  and,  moreover, 
large  premiums  were  received. 


1  The  following  table  shows  the  amount  at  the  respective  rates :  — 


Year 

A% 

3% 

^\% 

4% 

1880 

2,800,000 

1895 

14 

,274,237 

93,132,620 

5,612,974 

9,319,494 

Year. 

5% 

6% 

7% 

1880 
1895 

28,504,944 
I  5,855.027 

56,620,078 
31,542,943 

45,609,996 
15,820,600 

GENERAL  PROGRESS    OF   THE  DEBT        323 

The  broad  fluctuations  of  the  amount  of  tempo- 
rary bonds  (Hnes  B  and  C,  Diagram  B)  may  be 
noted  as  contributing  to  the  movement  of  the  net 
debt,  in  which  they  are  reckoned.  The  unprece- 
dented extent  of  assessment  enterprises  during  and 
after  the  Ring  period  increased  the  assessment 
bonds  outstanding  to  over  twenty-two  milHons  in 
1876,  but  they  were  greatly  reduced  by  the  fund- 
ing of  1878,  and  by  the  redemption  of  bonds  from 
the  sinking  fund,  in  1884,  by  virtue  of  the  debt 
act  of  1878.  Since  then  there  has  been  a  slow  but 
steady  increase  in  this  class  of  indebtedness.  The 
great  reduction  of  revenue  bonds  in  1874  was  due 
to  the  funding  of  the  floating  debt  left  from  the 
era  of  misrule.  Thereafter  the  annual  amount  left 
outstanding  of  these  bonds,  issued  during  the  year 
in  anticipation  of  taxes,  varied  little  till  toward  the 
close  of  the  '8o's,  when  more  prompt  collection 
of  taxes  reduced  them  greatly,  and  in  1896  would 
have  brought  the  amount  unpaid  at  the  end  of  the 
year  to  zero,  had  it  not  been  for  the  '  special  ' 
revenue  bonds  not  redeemable  till  1897. 

The  movements  of  the  sinking  fund  (line  D)  are 
subject  to  the  opposite  influences  of  accumulations 
from  revenue  and  depletions  by  redemption  of 
bonds.  The  growth  of  the  fund  was  approxi- 
mately steady  from  1872  to  1890,  since  when, 
partly  because  of  smaller  payments,  the  increase 
has  been  much  more  rapid.  The  net  debt  (line  E) 
which    represents    the    sum    of    the   funded    debt, 


324 


THE    CITY  DEBT 


assessment,  and  revenue  bonds,  less  the  sinking 
fund,  rose  for  a  few  years  after  the  downfall  of 
the  Ring,  but  then  declined  rapidly  from  1876  to 
1886;  since  that  time  there  has  been  an  almost 
equally  fast  increase  till  the  net  indebtedness  in 
1896  reached  within  one  or  two  millions  of  the 
figures  twenty  years  ago.  It  will  be  observed  that 
during  the  Ring  regime,  and  again  in  1878,  the  net 
debt,  owing  to  the  vast  amount  of  temporary  bonds 
outstanding,  exceeded  the  funded  debt  by  a  small 
amount. 

If,  now,  by  means  of  index  figures,  we  compare 
the  progress  of  the  city  debt  for  1876,  1886,  and 
1896,  with  that  of  the  annual  appropriations  al- 
ready pointed  out,  we  find  a  very  different  picture. 
Taking  1876,  when  the  net  debt  was  at  its  maxi- 
mum as  the  result  of  the  Ring  period,  for  a  basis, 
we  have : — 

Progress  of  City  Debt 


1876 


1886 


1896 


Population 

Assessed  valuation 

Total  appropriations 

Variable  or  contingent  appropriations 

Funded  debt 

Total  bonded  debt,  including  assess- 
ment and  revenue  bonds  .... 

Sinking  fund 

Net  indebtedness 


100 
100 
100 
100 
100 

100 
100 
100 


133-6 
128 

97 

131. 6 
102.5 


145.8 
754 


179.7 
181 

133 

195.2 

154.9 

133.9 

274.3 


CHIEF  BOND  ISSUES  SLVCE   1S71  325 

These  figures  show  that,  during  these  twenty  years, 
the  funded  debt  and  the  total  debt  have  increased 
considerably  less  rapidly  than  have  population,  as- 
sessed valuation,  or  contingent  appropriations;  that 
the  funded  debt  has  grown  considerably  faster,  but 
the  total  debt  at  almost  the  same  pace  as  the  gross 
budget ;  while  in  net  indebtedness  there  has  been 
an  absolute  decrease  as  against  very  large  in- 
creases in  the  figures  for  population,  valuation, 
and  appropriations. 

§  56.    Chief  Bo7id  Issues  since  1871. 

In  tracing  now  the  chief  purposes  for  which 
loans  have  been  made  since  1871,  we  may,  for 
convenience,  group  together  the  first  two  periods 
above  distinguished,  since  several  bond  issues  were 
distributed  partly  over  both.  A  large  part  of  the 
debt  contracted  from  1872  to  1884  may  be  attrib- 
uted, directly  or  indirectly,  to  the  Ring's  misrule. 
The  more  than  sixteen  millions  ^  of  consolidated 
stock  issued  to  fund  revenue  bonds  and  other  float- 
ing debt ;  the  $9,700,000  required  to  refund  assess- 
ment bonds ;  the  $3,899,494  for  meeting  the  state 
sinking  fund  deficiency ;  the  nearly  equal  sum  for 
completing  the  change  of  the  aqueduct  between 
93d  and  113th  streets;  the  $4,196,000,  chiefly  bor- 
rowed early  after  the  Ring  period,  for  water  mains 
under  a  Tweed  law  ;    and,  finally,  the  $5,707,734 

^  Figures  following  obtained  chiefly  by  comparing  debt  tables  in 
Comp.  Rep.,  1884,  p.  78,  with  those  of  Joint  Investigating  Com- 
mittee of  1871,  pp.  122-124. 


326  THE    CITY  DEBT 

of  *  city  improvement  stock '  for  street  openings 
—  all  these  may  be  considered  as,  to  no  small 
extent,  a  legacy  from  the  era  of  misgovernment. 
The  most  important  of  the  remaining  loans  during 
these  years  were  for  improving  Central  Park  and 
for  extending  the  sources  of  water  supply,  each  of 
which  required  more  than  five  millions ;  for  the 
New  York  and  Brooklyn  bridge  ($4,638,500);  and 
for  constructing  docks,  about  a  million  yearly  being 
borrowed  for  the  latter  purpose  from  1872  to  1884. 

The  main  objects  for  which  bonds  have  been 
issued  during  the  great  borrowing  period  since 
1884  have  been  (i)  water  supply,  (2)  new  parks, 
(3)  dock  improvements,  (4)  bridges  over  the  Har- 
lem, (5)  new  schoolhouses,  and  (b)  repaving  of 
streets. 

By  far  the  most  expensive  enterprise  ever  under- 
taken by  the  city  has  been  the  new  Croton  aque- 
duct begun  under  a  law  of  1883.  The  need  for 
this  work  had  been  for  years  a  crying  one.  The 
conduct  of  the  task  has  been  interesting,  because 
of  the  political  motives  and  of  the  frauds  and  liti- 
gation connected  with  it.^  The  evil  of  state  inter- 
ference found  here  its  most  extreme  expression. 
Under  the  original  law  the  construction  of  the 
aqueduct  was  directed  by  a  commission  composed 
of  the  mayor,  comptroller,  commissioner  of  public 
works,  and    four   other    members,  not   connected 

1  See  Report  of  Special  Committee,  Senate  Documents,  1889, 
No.  57.     The  minority  agreed  in  most  of  the  charges. 


CHIEF  BOND  ISSUES  SINCE  187 1  327 

with  the  city  government,  named  in  the  law. 
The  constitution  of  this  body  marked  a  sufficient 
usurpation  by  the  state  of  properly  municipal 
power  to  justify  complaint,  but  it  did  not  satisfy 
the  politicians.  Contracts  for  more  than  half  of 
the  work  had  been  let  by  this  board  to  the  firm  of 
O'Brien  &  Clark,  Mr.  O'Brien  being  chairman 
of  the  Democratic  state  central  committee.  It  is 
charged  that  it  was  the  desire  of  Mr.  O'Brien  to 
escape  too  careful  scrutiny  of  his  estimates  and 
bills  by  the  comptroller  and  mayor  in  the  interests 
of  the  city,  that  led  him  to  make  a  '  deal '  for 
a  reorganization  of  the  aqueduct  commission  with 
certain  Republicans  in  the  legislature,  who,  as  had 
been  suggested  by  the  speaker  of  the  assembly, 
thought  it  "  wise  to  increase  the  Republican  end 
of  that  commission  in  order  that  the  men  should 
not  be  voted  solidly  for  the  Democratic  party."  ^ 

In  1886,  accordingly,  a  bill  was  run  through  in 
a  somewhat  surreptitious  manner,  removing  the 
mayor  and  comptroller  from  the  aqueduct  board 
and  putting  in  their  place  three  persons  appointed 
by  the  governor.  The  commission,  as  thus  recon- 
stituted, was  composed  almost  solely  of  mere  poli- 
ticians, and  its  work  proved  far  from  satisfactory. 
Mayor  Hewitt  declared  in  a  letter  to  the  governor  : 
"  It  is  an  abomination  in  the  eyes  of  the  citizens 
of   New  York,  and  its  history  has  been  one  con- 

^  See  Report  of  Special  Committee,  Senate  Documents,  1889, 
No.  57,  p.  699,  testimony  of  Mr.  Hamilton  I'^ish. 


328  THE    CITY  DEBT 

tinned  scandal."  ^  Some  of  the  abnses  of  the 
aqneduct  management  were  made  pubHc  in  1888 
by  a  senate  investigating  committee ;  and,  finally, 
at  a  special  session  of  the  legislature  called  in 
July,  on  the  recommendation  of  Governor  Hill, 
who  acknowledged  the  injustice  of  the  law  of  1886 
which  he  had  approved,  the  board  was  reconsti- 
tuted to  consist  of  the  mayor,  comptroller,  com- 
missioner of  public  works,  and  four  members 
named  by  the  mayor.  Without  studying  in  de- 
tail the  character  and  extent  of  the  frauds  which 
were  discovered  in  the  aqueduct  contracts,  suffice 
it  to  say  that  by  the  substitution  of  material  of 
poorer  grade,  by  the  construction  of  unnecessary 
retaining  walls  in  the  tunnel,  and  by  excavation  in 
excess  of  specifications,  large  sums  were  added  to 
the  cost  of  the  work,  while  heavy  claims  for  similar 
charges  were  rejected.  There  have  been  numer- 
ous lawsuits  over  these  claims,  in  which  the  con- 
tractors have  for  the  most  part  been  worsted,  and 
scarcely  a  year  has  passed  without  an  effort  being 
made  in  the  legislature  to  enforce  their  payment 
by  special  act. 

The  total  amount  of  bonds  issued  for  this  great 
work  up  to  the  close  of  1896  was  no  less  than 
^33,695,000.^      This    sum    includes    the    cost    not 

1  See  Report  of  Special  Committee,  Senate  Documents,  1889, 
No.  57,  p.  42. 

-  Following  figures  from  Comp.  Rep.,  1894-1896,  statements 
B  and  D. 


CHIEF  BOND   ISSUES  SINCE   187 1  329 

merely  of  the  immense  tunnel-aqueduct,  which 
was  completed  several  years  before  the  water 
was  actually  conveyed  by  it,  but  also  of  new 
dams  and  improvements  of  various  sorts,  mostly 
at  the  source  of  supply,  for  which  large  outlay  is 
still  being  made.  Considerable  amounts  of  bonds 
of  another  class  are  also  being  issued  yearly  for 
acquiring  new  lands  at  the  Croton  watershed. 

The  agitation  for  larger  park  space,  like  that 
for  more  water,  dated  back  many  years,  and  the 
addition  to  the  city  in  1874  of  the  extensive  tracts 
beyond  the  Harlem  suggested  the  devotion  of  part 
of  this  territory  to  the  purpose.  Opposition  to  this 
plan  was  manifested  on  the  part  of  certain  officers, 
but  there  seems  no  doubt  that  the  general  public 
sentiment  was  largely  in  its  favor.  The  territory, 
selected  by  commissioners  appointed  by  the  mayor 
under  a  law  of  1883,  was  so  extensive  that  several 
years  were  required  to  carry  through  the  con- 
demnation proceedings;  and  meanwhile,  as  often 
happens  in  such  cases,  much  speculation  took 
place  in  the  lands  affected,  so  that  the  city  paid 
a  round  price  for  them.  The  bonds  for  paying 
awards,  mostly  issued  in  1889,  have  amounted  to 
^9,822,000.  While  these  large  parks  have  been 
established,  the  city  has  also,  during  the  past  two 
or  three  years,  entered  quite  extensively  on  the 
policy  of  opening  small  parks  in  the  heart  of 
the  town  itself.  Corlear's  Hook,  Mulberry  Bend, 
St.  John's,  Washington  Bridge,  and  other  smaller 


330  THE    CITY  DEBT 

parks  and  squares  have  been  established  at  a 
cost  of  several  millions.  Work  in  improving  and 
adorning  these,  as  well  as  the  large  parks  in 
Westchester  county,  has  little  more  than  begun, 
and  doubtless  much  will  ultimately  have  to  be 
spent  upon  them.  The  public  speedway,  recently 
commenced,  a  project  somewhat  similar  in  pur- 
pose to  the  parks,  has  cost  the  city  a  considerable 
amount,  while  if  the  '  Grand  Concourse '  in  the 
annexed  district  is  actually  carried  out  it  will  in- 
volve very  large  outlay.  That  New  York  is  not 
entirely  behind  in  the  modern  movement  for  more 
space  and  more  means  of  recreation  for  city  dwell- 
ers, is  evident  from  the  fact  that  in  the  twelve 
years  from  1885  to  1896  she  expended  more  than 
twenty  millions  on  her  parks  and  boulevards ; 
while  with  this  might  properly  enough  be  in- 
cluded more  than  three  millions  spent  on  the 
Museums  of  Art  and  Natural  History. 

For  the  new  Harlem  River  bridges  and  im- 
provements, together  with  half  a  million  for  the 
New  East  River  bridge,  there  have  been  issued 
since  1884  bonds  to  the  amount  of  $6,745,464; 
for  new  schoolhouses  and  sanitary  improvements, 
more  than  twelve  millions;  and  for  repaving  streets, 
nearly  seven  and  a  half  millions,  besides  minor  is- 
sues for  special  streets.  Some  of  the  first  school- 
house  bonds  ran  for  a  ten-year  term  only  and  are 
already  falling  due;  the  later  ones  are  for  twenty 
years.      It  will  be  remembered  that  according  to 


CHIEF  BOND   ISSUES  SINCE   187 1  33 1 

the  assessment  laws  it  is  impossible  to  charge  the 
cost  of  renewals  and  repairs  of  pavements  upon 
the  abutting  property  unless  the  owners  petition, 
and  an  immense  amount  of  repaying  has  had  ac- 
cordingly to  be  done  at  general  expense.  Only 
unusual  circumstances  can  justify  the  creation  of 
debt  for  such  purposes  as  building  schoolhouses 
and  paving  streets,  since  in  a  large  and  rapidly 
growing  city  the  probabilities  are  ordinarily  that 
approximately  an  equal  amount  of  such  improve- 
ments will  be  necessary  every  year ;  they  are 
properly  current  rather  than  extraordinary  ex- 
penses. But  in  New  York,  during  the  Ring 
misrule  and  the  succeeding  years  of  unavoidable 
restriction  in  both  taxation  and  borrowing,  the 
condition  of  the  schoolhouses  and  of  the  streets 
became  exceptionally  bad,  and  thereafter  to  have 
placed  the  cost  of  immediately  necessary  work 
on  the  taxpayers  would  doubtless  have  been  un- 
just. Further  large  bond  issues  for  all  the  pur- 
poses just  mentioned  are  still  being  made. 

Without  dwelling  specifically  upon  the  rather 
numerous  minor  issues  of  bonds,  the  following 
table  may  be  given  as  summarizing  all  the  loans 
since  the  fall  of  the  Ring.^  The  dates  of  issue 
are  roughly  indicated  in  the  case  of  the  more  im- 
portant stocks. 

^  Figures  chiefly  obtained  by  comparing  tables  in  Report  of  Joint 
Investigating  Committee,  pp.  122-124,  with  statements  B  and  D  in 
Comp.  Rep.  of  1884  and  1896. 


332  THE    CITY  DEBT 

Bonds  issued  Seite.mber  i6,  1871,  to  December  31,  i{ 


Water  supply : 

New  aqueduct,  1884-1896     .     .     .     , 

Water  mains,  1871-1875,  1896  .     .     . 

Other  purposes 

Parks : 

Improvement  of  Central  Park,  1871- 
1880 

Purchase  of  new  lands,  1889-1896 

Miscellaneous  improvements  .  .  , 
Public  buildings  and  sites  : 

School-houses,  chiefly  1884-1896  . 

Armories,  1884-1895 

Museums  of  Art  and  Nat.  Hist.    . 

Court-houses  and  miscel.  buildinsjs 


$33,695,000 
4,683,500 
12,959,772 


5,661,000 
14,161,304 
4,458,500 

14,011,851 
3,544,998 
4.054.103 

5.332.444 


51,338,272 


24,280,803 


Lands  and  sites  for  buildings    .     .     . 
Street  improvements ;  boulevards  : 
City  impr.  stocks   (openings),  1871- 
1883   189=; 

1,144,478 

6,486,506 
3.855.350 
7.393.500 
1,555,194 

28,087,87s 

Boulevards,  1871-1883,  1894-1896      . 
Repaving,  general,  1889-1896    .     .     . 
Miscellaneous 

19.290.550 

Bridges : 

New  York  and  Brooklyn      .... 
Other,  chiefly  over  Harlem  .... 

5,672,566 
7,069,434 

12,742,000 

Docks 

Refunding  old  debti 

Consolidated  stock.  Ring  debt       .     . 

Funding   assessment     bonds,    1878- 

1880 

16,695,249 

9,700,000 

8,377,000 
3,899.494 

28,553,000 

Refunding    consol.     stock    of    Ring 

period,  1896 

State  sinking  fund  deficiency    .     .     . 
Debt  of  annexed  territory,  1881,  1896 
Miscellaneous 

Total  issues 

Debt  September  16,  1871  .... 

Bonds  redeemed,  1871-1896  .     .     . 

38,671,743 

1,642,943 

660,361 

205,267,553 
81,351.158 

286,618,711 
100,429,469 

Debt  December  31,  1896  .... 

186,189,242 

1  The  bonds  for  the  liquidation  of  claims  and  judgments,  issued 
during  the  '70's,  are  omitted,  as  they  ran  for  only  a  few  years  and 
were  mostly  funded  by  consolidated  stock,  so  that  to  include  them 
would  have  been  duplication. 


PRESENT  STATE    OF  DEBT  333 

§  57.  Present  State  of  Debt.  Ejfect  of  Consoli- 
dation. 

Various  subdivisions  of  the  debt  are  made  in  the 
comptrollers'  reports  according  to  the  respective 
relations  to  the  sinking  fund,  — the  bonds  originally 
charged  thereto  under  the  ordinance  of  1844,  the 
second  lien  bonds  under  the  act  of  1878,  etc., 
being  separated  from  one  another.  Since,  how- 
ever, under  the  present  law  all  the  funded  bonds 
of  the  city  now  outstanding,  except  those  for 
water  supply  issued  under  the  constitutional  amend- 
ment of  1884,  may  be,  and  almost  beyond  ques- 
tion will  be,  redeemed  from  sinking  fund  No.  i 
(that  now  supported  solely  by  the  miscellaneous 
revenues),  these  technical  distinctions  may  be  dis- 
regarded here.  We  need  only  to  retain  the  broad 
division  between  bonds  respectively  redeemable 
from  sinking  fund  No.  i  and  from  sinking  fund 
No.  2.  It  is  of  interest,  however,  to  notice  that 
only  $2,500,600  of  the  old  water  and  park  bonds, 
to  which  the  sinking  fund  was  originally  pledged, 
remain  outstanding ;  and  as  it  is  only  on  these 
that  the  '  sinking  fund  for  interest '  pays  interest 
(aside  from  the  nominal  payment  on  the  bonds 
held  by  the  redemption  fund),  the  amount  sub- 
tracted from  the  interest  fund,  before  the  transfer 
of  its  surplus  to  the  redemption  fund,  is  very 
small,  and  will  become  zero  before  many  years. 
The  following  is  a  statement  of  the  situation  of 
the  debt  December  31,  1896:  — 


334 


THE    CITY  DEBT 
City  Debt,  December  31,  1896 1 


Funded  debt : 

Payable  from  sinking  fund  No.  i 

Water  debt  payable  from  fund  No.  2       ... 

^147,419,242 
38,770,000 

Total 

186,189,242 

9,718,448 
2,433.326 

198,341,017 
77,630,491 

120,710,526 
118,277,200 

Temporary  debt : 

Total  bonded  debt 

Amount  of  both  sinking  funds 

Net  debt  of  all  classes 

Net  debt,  less  revenue  bonds 

The  amount  of  sinking  fund  No.  i  was  $65,- 
904,946,  so  that  the  net  funded  debt  to  which  it 
will  be  applicable  was  $81,514,296.  Sinking  fund 
No.  2  amounted  to  $11,725,544,  and  the  net  water 
debt  under  the  constitutional  amendment  of  1884 
was  thus  $27,044,456.  Comment  has  already  been 
made  on  the  interest  of  these  various  bonds,  which 
now  is  at  a  weighted  average  of  somewhat  less 
than  4  per  cent.  The  term  of  the  various 
bonds  varies  considerably,  and  very  unequal 
amounts  mature  in  different  years.  An  excep- 
tionally large  sum  fell  due  in  1896,  and  again  in 
1 90 1,  1904,  1907,  1908,  and  191 5-1 9 1 6,  the  amounts 
maturing  will  be  large  ;  but  under  the  sinking  fund 
system  this  inequality  is  comparatively  unimpor- 
tant as  regards  particular  years,  provided,  as  is 
actually  the  case,  there  is  a  fairly  even  distribution 
as   between    longer   periods.     A    majority  of   the 

'  .Statements  B  and  E,  Comp.  Rep.,  1896. 


PRESENT  STATE    OF  DEBT 


335 


bonds  recently  issued  have  been  made  due  and  pay- 
able in  twenty  years  from  date,  but  many  thirty- 
year  bonds  are  also  issued.  More  than  $25,000,000 
of  stocks,  largely  created  in  1878  and  1889,  have 
been  made  payable  at  option  after  twenty  or  thirty 
years,  but  are  not  due  for  twenty  years  longer. 

The  net  funded  city  debt,  in  the  sense  used  by  the 
state  constitution,  at  the  close  of  the  last  fiscal  year 
($118,277,200),  was  equal  to  5.6  per  cent  of  the 
assessed  valuation  of  real  and  personal  property, 
and  represented  $59.32  of  indebtedness  per  capita. 
Comparison  with  other  American  cities  may  be 
made  by  means  of  the  United  States  census  of  1890. 
The  relative  per  capita  indebtedness  is  of  most  im- 
portance, the  proportion  borne  by  debt  to  assessed 
valuation  being  of  little  significance  because  of 
the  widely  varying  methods  of  valuing  property. 
Material  changes  in  the  following  table  would  be 
necessary  if  figures  for  1896  were  available :  — 

Per  Capita  Debt  of  American  Cities,  1890 1 


Jersey  City     .     .     . 

$106.56 

Pittsburgh    .     .     . 

$42.02 

Cincinnati       .     .     . 

83-32 

Minneapolis 

38.98 

Baltimore  .... 

73.22 

Philadelphia 

28.29 

New  Orleans .     .     . 

69.81 

Cleveland     . 

23.51 

Boston 

62.82 

Milwaukee  . 

14.26 

New  York  (1896)   . 

59-32 

Chicago  .     . 

11.98 

St.  Paul      .... 

54-55 

Detroit    .     . 

10.76 

St.  Louis    .... 

47.87 

San  Francisco 

2.50 

Brooklyn   .... 

42.96 

All  cities  over  4000 

31-39 

Buffalo       .... 

42.51 

^  U.   S.  Census,   compiled  from   report  on   Wealth, 
Taxation,  Vol.  I. 


Debt,   and 


336  THE    CITY  DEBT 

It  will  be  seen  that  five  large  cities  had,  in  1890, 
heavier  debt  burdens  than  that  now  borne  by  New 
York.  Since  that  year,  moreover,  Brooklyn  has 
borrowed  so  largely  as  to  nearly  equal  New  York 
in  per  capita  indebtedness,  while  the  proportion 
borne  to  the  assessed  value  of  property  is  con- 
siderably greater  than  in  New  York.  In  fact, 
since  the  consolidated  city  assumes  also  the  pay- 
ment of  Kings  county  bonds,  the  annexation  of 
the  sister  city  places  the  debt  in  a  much  more 
unfavorable  condition  than  before  as  regards  the 
constitutional  limit  of  10  per  cent  of  the  real  estate 
valuation.  The  gross  debt  of  Brooklyn  in  1895 
was  $57,728,521,  leaving  the  net  debt,  deducting 
the  small  sinking  fund,  $52,037,000  or  9.6  per  cent 
of  the  real  estate  valuation.  Kings  county,  with 
practically  the  same  territory  as  the  city,  owed 
nearly  thirteen  millions  in  1895,  and  two  or  three 
millions  of  bonds  have  been  issued  by  the  other 
bodies  united  by  the  law  of  1897.  The  net  debt 
of  Greater  New  York  at  the  date  of  consolidation, 
January  i,  1898,  will  be  about  185  or  190  millions, 
approximately  8  per  cent  of  the  assessed  valuation 
of  real  property. 

§  58.     The  SinkiJig  Fund  and  Future  Debt  Issues. 

The  large  additions  to  the  city  debt  thus  to  be 
made  by  consolidation  will  not,  according  to  the 
new  charter,  be  chargeable  upon  the  present  sink- 
ing funds  of  New  York  city  ;  but  the  metropolis 
will  be  compelled  to  carry  out  all  existing  provi- 


THE   SINKING   FUND  337 

sions  of  law  for  sinking  the  bonds  of  the  former 
separate  bodies  —  chiefly  by  raising  taxes.  Nor, 
as  we  have  seen,  will  the  present  funds  be  charged 
directly  with  stocks  hereafter  created,  for  which 
primarily  taxation  is  to  be  the  means  of  redemp- 
tion. A  study  of  the  present  capacities  of  the 
sinking  fund  No.  i  will  show,  however,  that, 
if  the  law  can  be  so  interpreted  as  to  allow  the 
transfer  of  its  surplus  as  soon  as  accumulations 
reach  the  present  amount  of  bonds,  and  before 
they  mature,  it  will  soon  be  able  to  aid  largely  in 
redeeming  bonds  hereafter  issued,  and,  indeed, 
will  perhaps  be  more  than  sufficient  to  meet  them. 
Redemption  fund  No.  2  may  be  disregarded  here, 
since  its  accumulation  must  be  at  a  perfectly 
definite  rate,  and  from  taxation. 

There  have  been  few  changes  since  1844  in  the 
classes  of  ordinary  revenues  from  city  property, 
franchises,  etc.  (aside  from  taxes  and  assess- 
ments) set  apart  to  the  interest  and  redemption 
funds.  The  most  important  has  been  the  removal 
from  the  redemption  fund  of  excise  licenses,  which 
now  constitute  a  distinct  feature  in  the  finances. 
Some  additions  to  the  annual  revenues  of  the  funds 
have  been  made  by  devoting  to  them  the  surplus 
earnings  of  the  New  York  and  Brooklyn  bridge, 
receipts  from  railway  franchises,  and  other  minor 
sources ;  but  the  great  cause  of  the  rapid  increase 
which  has  taken  place  is  the  growth  of  the  income 
from  docks  and  from  Croton  water  rents,  which 
z 


338 


THE    CITY  DEBT 


contribute  nearly  nine-tenths  of  the  net  revenues 
of  redemption  fund  No.  i  and  of  the  interest  fund.^ 
Under  the  present  law  practically  all  of  the  reve- 
nues originally  pledged  to  these  two  funds  go  ulti- 
mately to  the  redemption  fund,  which  receives 
almost  no  other  real  income.  The  receipts  of  the 
interest  fund  for  1896  were  ^4,796,775,  but  all  save 
about  $120,000  of  this  was  transferred  to  the  re- 
demption fund  as  interest  on  bonds  held  by  it  and 
as  surplus.  The  net  revenue  of  the  redemption 
fund,  excluding  the  small  amount  received  from 
assessments  and  excluding  the  transfers  just  men- 
tioned, was  $2,879,601.  Now  in  order  to  estimate 
the  future  growth  of  the  redemption  fund,  we  may 
take  as  a  basis  the  total  net  revenues  of  the  re- 
demption and  the  interest  funds  combined,  since 
soon  the  interest  payments  from  the  interest  fund 
on  bonds  outside  the  other  fund  will  cease  entirely, 
as  will  the  income  of  the  redemption  fund  from  as- 
sessments. The  rate  of  increase  in  these  revenues 
for  the  future  may  be  roughly  estimated  from  that 
shown  in  the  past  twenty  years,  which  is  indicated 
by  the  following  figures,  the  years  1875-95  being 
chosen  as  more  typical  than  1876-96  : 


1875 

1880 

1885 

1890 

1895 

Net  revenues  .     .     . 
Index  numbers     .     . 

$3,160,552 
100 

$3,296,300 
104 

$4,818,681 
152 

$5,892,962 
186 

$7.73i."9 
244 

1  See 

table,  p. 

183. 

THE   SINKING  FUND  339 

Thus  the  annual  revenues,  hereafter  practically 
all  available  for  the  redemption  fund,  have  multi- 
plied two  and  one-half  times  within  twenty  years, 
while  the  rate  of  increase  has  been  constantly 
becoming  more  rapid.  It  will  certainly  be  an 
exceedingly  conservative  assumption  to  suppose 
that  these  same  revenues  twenty  years  hence  will, 
unless  some  change  of  policy  in  fixing  charges  is 
made,  be  double  what  they  are  now.  On  this 
hypothesis  the  income  of  the  sinking  fund  for 
1916  would  be  $15,352,752  (double  $7,676,376  for 
1896);  and,  if  the  increase  be  assumed  as  in  arith- 
metical progression,  the  average  annual  income 
from  1897  to  1916  inclusive  would  be  $11,514,564, 
and  the  total  additions  to  the  redemption  fund  No. 
I  w^ould  be  $230,291,280.  On  January  i,  1897, 
the  amount  of  debt  which,  under  the  new  charter, 
is  primarily  chargeable  to  this  fund,  less  the 
amount  already  accumulated  by  the  fund,  was 
only  $81,514,296,  and  it  will  probably  not  be 
much  greater  when  the  charter  takes  effect.  It 
is  more  than  probable  that  the  sinking  fund  will 
within  ten  years  have  entirely  provided  for  this 
indebtedness,  the  average  maturity  of  which  is 
over  fifteen  years.  If  then  the  ambiguous  words 
of  the  charter  above  quoted  are  held  to  mean  that 
the  revenues  of  the  fund  cannot  be  diverted  till 
the  bonds  charged  to  it  are  actually  redeemed, 
either  hardship  will  arise,  as  so  often  before,  from 
unnecessary  accumulations,  or  some  change  in  the 


340  THE    CITY  DEBT 

law  will  be  required.  In  fact  it  is  by  no  means 
unlikely  that  the  revenues  at  present  pledged  to 
the  sinking  fund  would  be  more  than  able,  un- 
aided by  taxation,  to  provide  for  all  bonds  here- 
after issued  by  the  greater  city,  except  water 
bonds,  for  which  taxes  are  constitutionally  required, 
—  but  it  is  of  course  impossible  even  to  guess  at 
the  amount  of  money  that  will  be  borrowed  in 
the  future. 

Many  New  York  citizens  are  very  proud  of  the 
manner  in  which  the  redemption  fund  has  grown, 
and  have  a  vague  belief  that  it  enables  the  city  to 
borrow  without  burdening  its  taxpayers.  As  a 
matter  of  fact,  the  sinking  fund  system  is  ex- 
tremely crude.  We  have  seen  how  it  has  pro- 
duced hardships  in  the  past,  which  only  awkward 
devices  of  transfers  of  revenues  and  changes  in 
the  applicability  of  the  redemption  fund,  requiring 
special  legislative  act,  have  in  part  removed.  The 
system  under  the  new  charter  is  even  more  com- 
plex than  before,  and  while  possibly  no  hard- 
ships will  again  result,  it  is  difficult  to  see  why 
the  framers  of  the  charter  should  have  perpet- 
uated the  old  conditions,  at  least  longer  than 
was  necessary  to  fulfil  present  obligations.  It 
would  have  been  quite  as  safe  for  bondholders, 
much  simpler,  and  probably  would  have  distrib- 
uted the  burden  of  debt  payment  more  evenly 
than  is  likely  to  prove  the  case,  had  the  plan  of 
raising  annual  taxes  for  bonds  hereafter  created. 


THE   SINKING  FUND  34 1 

as  required  by  the  charter,  been  adopted  without 
the  further  provision  for  turning  over  to  the  new 
sinking  fund  the  surplus  of  the  old  sinking  fund. 
The  system  of  appropriating  special  classes  of 
revenue,  instead  of  fixed  annual  sums,  to  the  debt, 
cannot  give  that  perfectly  proportional  and  certain 
reduction  which  is  so  desirable  in  managing  local 
indebtedness.^  It  is  never  advisable  except  when 
credit  is  so  low  that  only  by  having  their  fingers 
directly  on  the  means  of  repayment  will  money- 
lenders offer  loans.  The  system  to  which  the 
metropolis  has  clung  so  closely  is,  in  fact,  as 
Professor  Ross^  declares,  "characteristic  of  new 
countries  in  the  earlier  stages  of  financiering,  or 
of  nations  threatened  with  disaster  to  public  credit. 
...  It  is  a  survival  of  the  time  when  general 
national  credit  was  unknown,  and  loans  were 
raised  by  pledging  specific  funds  to  pay  interest 
and  principal."  Surely  New  York  is  not  so  far 
behind  the  great  majority  of  our  American  munici- 
palities that  she  needs  to  adopt  this  antiquated 
system  while  they  incur  loans  on  the  security  of 
sinking  funds  raised  by  annual  taxes.  The  specific 
revenue  system  in  New  York  has  already  caused 
so  many  difficulties  and  required  so  many  patches 
by  act  of  the  legislature  that  any  prejudice  in  its 

1  It  is  often  very  undesirable  in  national  financiering  to  continue 
sinking  fund  accumulations  while  the  country  is  actually  borrowing 
largely,  but  in  municipalities  the  conditions  are  entirely  different. 

2  Sinking  Funds,  p.  95. 


342  THE    CITY  DEBT 

favor  should  have  long  since  been  dispelled.  The 
plan  of  pledging  specific  revenue  from  certain 
income-creating  works  to  the  service  of  the  debt 
created  for  their  construction  does  indeed  aid  in 
clear  comprehension  of  the  working  of  municipal 
investments,  but  even  here  the  object  may  be 
accomplished  by  merely  keeping  an  additional  set 
of  accounts.  At  any  rate  this  advantage  has  never 
even  been  sought  by  New  York  financiers. 

A  further  strong  objection  to  the  present  sink- 
ing fund  system  is  that  it  confuses  the  people  as 
to  the  real  cost  of  government.  The  payments 
for  the  interest  and  redemption  of  the  debt  in 
New  York,  as  everywhere  else,  should  and  do 
constitute  just  as  real  and  immediate  a  burden  on 
the  taxpayers  as  any  other  form  of  public  outlay, 
unless  of  course  bonds  have  been  issued  for  in- 
come-earning investments.  Yet  owing  to  the  fact 
that  a  large  part  of  the  expenditures  on  the  debt 
do  not  appear  in  the  regular  budget  account, 
many  citizens  fail  to  appreciate  this  burden.  By 
the  complicated  practice  of  keeping  the  accounts 
of  the  three  sinking  funds,  which  will  be  yet  fur- 
ther involved  under  the  new  charter,  the  actual 
outlay  for  the  debt  service  is  made  still  more 
difficult  to  ascertain.^     Under  the  simple  plan  of 

1  This  lack  of  clearness  is  only  partly  remedied  in  one  of  the 
tables  of  the  comptroller's  reports  (Statement  G),  which,  im- 
mediately under  the  expenditures  on  appropriation  account,  gives 
those  from  the  sinking  funds.     It  is  evident  tliat  the  real  annual 


THE   ShYKING  FUND  343 

gradual  amortization  from  taxation,  the  entire  ex- 
penditures for  interest  and  redemption  would  have 
their  place  in  the  regular  appropriation  account, 
and  the  people  would  realize  clearly  that  the  debt 
payments  constitute  a  real  and  direct  burden  upon 
them.  All  the  miscellaneous  revenues  would  then 
be  merged  in  the  general  fund ;  a  change  which 
would  produce  the  further  incidental  advantages 
that,  without  the  complications  of  the  present  scat- 
tering of  these  revenues  among  the  general  fund, 
the  redemption  fund,  and  the  interest  fund,  it 
could  be  seen  clearly  and  at  once  just  how  much 
they  contributed  to  the  city  finances ;  and,  more 
important  still,  that  without  difficulty  the  man- 
agement of  every  source  of  municipal  income 
could  be  brought  under  the  single  supervision  of 
the  body  possessing  the  general  control  of  the 
budget. 

This  objection  as  to  the  obscurity  resulting  from 
the  present  sinking  fund  system  is  not  a  mere 
theoretical  one.  There  can  be  no  doubt  that 
many  citizens  of  New  York  quite  misunderstand 
the  nature  of  the  sinking  fund.  The  newspapers 
not  infrequently  explain  with  sang  f void  that  the 
*  sinking  fund  will  take  care  of '  money  borrowed, 
with  no  burden  to  taxpayers,  and  even  city  offi- 
cials who  have  charge  of  the  creation  of  debt  are 

contribution  toward  the  debt  is  not  represented  by  the  amounts 
paid  to  redeem  maturing  bonds,  which  fluctuate  widely,  l)ut  by  the 
additions  made  to  the  sinl<iiig  fund  for  redemption  itself. 


344  ^^^    CITY  DEBT 

said  sometimes  to  fall  into  this  fallacy.  There  is 
a  manifest  tendency  to  look  upon  the  fund  as  a 
sort  of  self-sufificient  entity,  a  widow's  cruse  that 
by  some  legerdemain  will  allow  the  people  to  spend 
money  without  taking  it  from  their  pockets. 


CHAPTER   XII 

AUDIT,   ACCOUNT,   AND    FINANCIAL    RESPONSIBILITY 

§  59.  Aiiditijig  and  Accounting  System} 
The  methods  of  accounting  and  auditing  are 
often  omitted  in  financial  studies  as  comparatively 
unimportant,  but  from  the  bearing  that  they  have 
on  the  general  honesty  and  efificiency  of  the  ad- 
ministration, the  main  outlines  of  practice  in  New- 
York  deserve  mention. 

The  two  chief  financial  officers  are  the  comp- 
troller and  the  chamberlain.  The  former,  who 
is  elected  by  the  people  every  three  years  (every 
four  years  under  the  new  charter),  has  the  more 
important  and  discretionary  functions,  and  is  de- 
nominated the  head  of  the  finance  department. 
The  chamberlain  merely  heads  a  bureau  in  the 
department,  although  he  is  appointed  directly  by 
the  mayor,  and  his  duties  are  almost  purely  min- 
isterial. All  moneys  of  the  city,  from  whatever 
source,  pass  ultimately  through  the  hands  of  the 
chamberlain,  but  not  all  receipts  come  through 
the  comptroller's  office,  nor  are  all  disbursements 

^  For  general  outline  see  Consolidation  Act,  §§  123-126,  163-165; 
Comp.  Rep.,  1892,  pp.  58-66. 

345 


346  FINANCIAL  RESPONSIBILITY 

ordered  by  him.  The  collection  of  various  forms 
of  revenue  is  in  the  control  of  departments  to 
which  they  specially  relate  —  water  rents  being 
paid  to  the  department  of  public  works,  dock 
rents  to  the  dock  department,  etc.  ;  while  the 
sinking  fund  commissioners  directly  draw  war- 
rants on  the  sinking  funds.  All  moneys  re- 
ceived are  turned  over  to  the  chamberlain  daily 
and  at  once  deposited  in  bank.  The  city  deposi- 
tories, which  are  designated  by  majority  vote  of 
the  mayor,  comptroller,  and  chamberlain,  must 
agree  to  pay  interest  on  the  daily  balances  at 
a  rate  fixed  for  each  quarter  by  those  officers. 
No  bank  may  hold  more  of  the  city's  money  than 
amounts  to  half  its  capital  and  surplus. 

A  general  outline  of  the  system  of  accounts  has 
already  been  given  in  §  33.  Besides  a  record  of 
cash  receipts  and  payments,  separate  accounts  are 
kept  by  both  comptroller  and  chamberlain  of  the 
sums  appropriated  under  each  head,  which  are 
treated  as  credits,  and  of  the  expenditures  charged 
to  them.  The  comptroller  is  required  to  furnish 
each  department  weekly  a  statement  of  the  un- 
expended balances  of  its  various  appropriations ; 
while  the  chamberlain  is  forbidden  to  pay  any 
warrant  drawn  against  an  exhausted  appropriation. 

Before  any  claim  upon  the  city  can  be  paid  it 
must  go  through  a  rather  long  process.  For  the 
most  part  each  separate  bill  of  each  individual 
must  be  paid  by  a  distinct  warrant  of  the  comp- 


AUDITING  AND  ACCOUNTING   SYSTEM      347 

troller;  there  are  no  gross  payments  to  depart- 
ments—  except  to  the  police  department  —  to  be 
by  them  disbursed  in  detail.  The  first  audit  of 
bills,  however,  is  naturally  by  the  department 
concerned.  In  departments  governed  by  several 
commissioners,  a  formal  vote  of  the  board,  duly 
recorded,  is  required  to  approve  bills,  such  action 
being,  of  course,  based  on  reports  by  inspectors  and 
auditing  officers  connected  with  the  department. 
The  effect  of  approving  a  claim  is  to  draw  a  req- 
uisition on  the  comptroller,  which  must  be  accom- 
panied by  a  voucher  containing  the  necessary 
statements  concerning  its  validity,  usually  verified 
by  oath,  the  receipt,  signed  in  advance,  etc.  But 
this  departmental  audit  is  by  no  means  final ;  the 
bill  must  pass  the  scrutiny  of  the  auditing  bureau 
of  the  finance  department,  which  is  headed  by  two 
auditors.  There  expert  accountants  examine  the 
vouchers  to  see  if  all  the  numerous  technical  re- 
quirements have  been  complied  with  ;  and,  more 
important  than  this  formal  procedure,  the  bureau 
does  a  vast  amount  of  actual  inspection  of  work 
and  supplies,  especially  in  the  case  of  contracts, 
to  ascertain  whether  fair  value  has  been  received. 
Although  only  ten  or  a  dozen  inspectors  and  engi- 
neers are  employed  by  the  bureau,  they  discover 
many  defects  and  omissions  that  have  been  passed 
over  by  the  more  numerous  departmental  inspect- 
ors. During  1892  they  made  about  19,000  inspec- 
tions and  examinations,  and  reported  adversely  in 


348  FINANCIAL   RESPONSIBILITY 

nearly  3000  cases;  while  in  1894,  out  of  38,010 
vouchers  and  pay-rolls  examined  by  the  auditing 
bureau,  1847  were  returned  for  correction  to  the 
departments.^ 

If  a  claim  is  found  correct,  the  auditors  duly 
certify  to  that  effect  and  prepare  in  blank  a 
warrant  addressed  to  the  chamberlain,  which 
states  on  its  face  the  precise  purpose  of  the  pay- 
ment and  the  appropriation  or  account  to  which  it 
is  charged.^  All  warrants  must  be  signed  by  the 
comptroller  in  person,  and  until  recently  had  to  be 
countersigned  by  the  mayor  himself;  but  this  prov- 
ing too  great  a  burden,  the  duty  is  now  performed 
by  his  chief  clerk.  A  check  on  one  of  the  city  de- 
positories is  inseparably  attached  to  each  warrant, 
and  this  must  be  signed  by  the  chamberlain 
personally,  before  the  claimant  can  receive  his 
money. 

There  are  two  exceptions  to  this  method  of  pay- 
ing bills.  The  first  is  with  regard  to  the  police 
department,  which  has  a  separate  treasury,  and 
receives  monthly  from  the  comptroller  warrants 
for  one-twelfth  of  the  amount  of  each  main  head  of 
the  police  appropriation.  So  far  as  the  pay  of  the 
force  is  concerned,  this   arrangement  is  not  spe- 

^  Comp.  Rep.,  1892,  p.  58;  1894,  p.  17.  The  number  of  inspec- 
tions and  of  adverse  reports  does  not  determine  definitely  the 
number  of  vouchers  sent  back  for  correction. 

-  Warrants  on  the  appropriation  account  are  designated  as  '  A,' 
those  on  special  and  trust  accounts  as  '  B '  warrants. 


FINANCIAL  RECORDS  AND  REPORTS         349 

cially  anomalous, — it  merely  constitutes  a  second 
paymaster's  bureau, — but  when  it  is  extended  to 
payments  for  miscellaneous  purposes  it  seems  to 
make  the  department  too  independent  of  the  audit- 
ing supervision  of  the  comptroller.  This  disadvan- 
tage is  partly  overcome,  however,  by  a  provision 
that  the  comptroller  may  require  duplicate  vouchers 
to  be  filed  in  his  office.  The  other  exception  to 
the  general  auditing  system  is  the  very  natural  one 
of  pay-rolls.  Warrants  covering  the  collective 
salaries  and  wages  in  each  division  of  each  de- 
partment are  drawn  to  the  city  paymaster.  He 
pays  day  laborers  in  cash,  while  salaried  officers 
receive  checks  signed  by  the  paymaster,  but,  like 
ordinary  warrants,  prepared  in  blank  under  the 
supervision  of  the  auditing  bureau. 

Practically  the  only  change  in  the  auditing 
system  under  the  Greater  New  York  charter  is 
that  additional  auditors  will  be  appointed,  part  of 
whom  are  to  act  on  claims  arising  in  the  separate 
boroughs. 

§  60.    Financial  Records  and  Reports. 

If,  in  the  early  days  of  the  city  and  again  during 
the  Ring  period,  there  was  great  lack  of  publicity 
regarding  financial  details,  the  evils  that  arose 
from  this  lack  have  caused  the  enactment  of  laws 
requiring  frequent  publication  of  the  most  minute 
transactions.  Records  of  every  branch  of  the  ad- 
ministration are  kept  in  great  detail,  and  abstracts 
giving  the  essentials  are  published  weekly  in  the 


350  FINANCIAL   RESPONSIBILITY 

City  Record}  The  Record  is  a  daily  journal  de- 
voted solely  to  city  business,  and  its  contents  have 
so  increased  that  they  now  fill  from  five  to  six 
thousand  finely  printed  pages  yearly.  Especially 
every  action  of  a  department  relating  in  any  way 
to  expenditure  must  be  reported,  —  the  main  feat- 
ures of  contracts  entered  into  during  the  week,  the 
bills  audited,  the  amount  of  requisitions  drawn  on 
the  comptroller,  etc.  The  chamberlain  and  the 
comptroller  publish  separate  weekly  statements ; 
the  latter  giving,  not  merely  receipts  and  pay- 
ments according  to  the  main  heads  of  account, 
but  the  bonds  issued,  the  amount  of  the  city 
debt,  a  list  of  contracts  made  by  all  departments, 
the  openings  of  bids  for  contracts  attended  by  the 
comptroller,  and  other  details.  Quarterly  reports 
also  are  required  of  every  department;^  the  finance 
department  makes  two,  one  giving  general  financial 
transactions,  the  other,  that  of  the  auditing  bureau, 
containing  a  list  of  all  separate  warrants  drawn, 
with  the  payee,  the  purpose,  etc.,  in  detail. 

Most  departments  make  also  annual  reports. 
The  legal  provisions  regarding  those  of  the 
finance  department  are  very  unsatisfactory.  The 
fiscal  and  budget  year  corresponds  with  that  of 
the  calendar,  yet  a  report  covering  the  year  end- 
ing December  31  is  not  required  by  law,  while 
two  reports  are  required  for  periods  of  twelve 
months  ending  at  other  dates.     The  first  of  these 

1  Consolidation  Act,  §  51.  -  Ibid.,  §  49. 


FINANCIAL  RECORDS  AND  REPORTS         35  I 

is  the  official  '  annual  statement  of  the  receipts 
and  expenditures '  by  the  comptroller,  which  must 
be  published  two  months  before  the  annual  elec- 
tion, for  the  year  ending  on  the  first  of  the  month 
when  it  is  made.  This  practice  dates  from  the  old 
days  when  the  city  election  was  held  in  April,  so 
that  the  rep6rt  actually  covered  the  calendar  year 
preceding.  When  the  election  was  changed  to 
November,  this  section  of  the  charter  was  retained 
unaltered,^  and  the  report  now  covers  the  year 
ending  July  31.  The  budgets  of  two  years  are 
thus  involved,  and  the  report  becomes  not  only 
superfluous,  but  confusing.  Another  act^  requires 
the  accounts  of  the  chamberlain  to  be  closed  on 
the  last  day  of  November ;  the  commissioners  of 
accounts  must  then  examine  them,  together  with 
all  the  vouchers,  and  publish  a  summary  of  the 
accounts  for  the  preceding  twelve  months,  with  a 
detailed  statement  of  the  city  debt.  If  the  finance- 
department  did  no  more  than  the  law  thus  requires, 
it  would  be  very  difficult  to  follow  the  financial 
transactions  of  the  city,  and  this  was  indeed  the 
case  from  1870  till,  in  1879,  the  department  began 
the  practice  of  making  its  last  quarterly  report  a 
summary  of  the  year.  In  1883  the  summary  was 
made  a  document  distinct  from  the  quarterly  re- 
port ;  and  since  then  this  annual  statement,  which 
is  what  is  ordinarily  understood  ])y  the  '  comp- 
troller's report,'  has  been  enlarged  and  improved, 

1  Consolidation  .Vet,  §  126.  -  Ibid.,  §  164. 


352  FTNANCIAL   RESPONSIBILITY 

and  various  tables  and  comparisons  with  previous 
years  have  been   added  till,  at  last,  it  has   come, 
to    present  a  very   satisfactory  view   of  the  city 
finances. 

The  charter  of  Greater  New  York  provides  that 
the  report  of  the  finance  department,  now  pub- 
lished annually  in  August,  shall  be  made  only 
once  in  two  years.  While  making  no  definite  pro- 
vision for  continuing  the  present  series  of  reports 
covering  the  calendar  year,  it  establishes  a  bureau 
of  general  municipal  statistics,  which  is  to  publish 
an  annual  volume  containing  financial  and  other 
statistical  tables.  It  is  to  be  hoped  that  ultimately 
the  financial  statements  of  the  metropolis  will  be 
made  much  more  easy  of  comprehension  and  more 
logical  than  they  now  are. 

§  6i.  Inspection  of  Accounts  and  Official  Re- 
sponsibility. 

So  numerous  and  complex  are  the  reports  of 
the  various  departments  that  it  is  practically  im- 
possible for  citizens,  or  for  officers  whose  duties 
are  not  specially  connected  with  the  accounts,  to 
understand  them  and  detect  errors  or  frauds.  This 
difficulty  the  charter  of  1873  sought  to  remedy 
by  establishing  two  'commissioners  of  accounts,'^ 
appointed  by  the  mayor  and  specially  subject  to 
his  direction,  whose  sole  duty  it  is  to  examine 
printed  reports,  and  more  particularly  original 
papers  and  accounts.     Besides  their  annual  report 

1  Consolidation  Act,  §  i  lo. 


INSPECTION  OF  ACCOUNTS  353 

on  the  finances  for  the  year  ending  November  30, 
these  commissioners  make  quarterly  examinations 
of  the  accounts  of  the  comptroller  and  the  cham- 
berlain, and  not  merely  report  as  to  their  correct- 
ness, but  publish  detailed  statements  that  are  little 
more  than  duplicates  of  those  of  the  finance  depart- 
ment itself.  Besides  these  regular  tasks,  they  un- 
dertake from  time  to  time,  at  the  bidding  of  the 
mayor,  special  investigations  of  the  business  meth- 
ods and  accounts  of  particular  departments ;  for 
this  purpose  they  are  empowered  to  summon  wit- 
nesses and  compel  testimony.  It  is  probably  true, 
as  has  been  sometimes  charged,  that  the  action  of 
the  commissioners  of  accounts  has  usually  been 
to  considerable  degree  perfunctory,  giving  little 
additional  security  against  mismanagement.^  The 
investigations  into  the  city  government,  now  and 
then  made  by  special  committees  of  the  state 
legislature,  awaken  much  more  popular  attention 
and  produce  more  direct  results  in  the  way  of 
modifications  of  law  and  practice  than  do  those 
of  the  commissioners  of  accounts.  Unfortunately, 
partisan  motives  enter  to  such  an  extent  into  these 
legislative  investigations  that  they,  too,  are  usually 
of  comparatively  little  value. 

1  Testimony  before  the  Fassett  Investigating  Committee  showed 
that  the  commissioners  then  in  office  were  decidedly  incompetent 
and  did  very  httle  personal  work  on  the  accounts,  and  that  commit- 
tee was  of  the  opinion  that  the  commissioners  had  never  accom- 
plished anything  of  value.  Senate  Documents,  1891,  No.  80, 
pp.  2567  ff ;  part  5,  p.  119. 
2  A 


354  FINANCIAL   RESPONSIBILITY 

Various  other  detailed  provisions  of  law,^  for 
securing  responsibility  of  public  officers,  have 
grown  out  of  the  abuses  against  which  the 
charters  of  1853,  1857,  and  1873  were  aimed. 
All  official  records  and  accounts  must  be  open 
to  the  inspection  of  any  taxpayer.  On  the  affi- 
davit of  the  mayor,  comptroller,  a  commissioner  of 
accounts,  or  of  any  five  aldermen  or  taxpayers,  an 
order  may  be  issued  by  a  judge  of  the  supreme 
court,  directing  any  officer  to  be  summarily  ex- 
amined touching  his  use  of  public  moneys,  and 
other  witnesses  may  also  be  summoned.  Severe 
penalties  for  fraud  and  bribery  in  all  their  forms 
are  prescribed.  Aldermen  and  officials  are  for- 
bidden direct  or  indirect  interest  in  contracts  or 
expenditures.  A  provision  of  no  small  importance 
in  this  general  direction  is  that  all  fees  and  per- 
quisites of  every  officer,  except  the  sheriff,  who 
still  retains  one-half  his  fees,^  must  be  turned  over 
to  the  city  treasury,  fixed  salaries  being  paid  in 
place  of  such  remuneration. 

By  means  of  all  these  provisions  for  full  ac- 
counts, frequent  reports,  and  liability  to  investiga- 
tion, —  provisions  scarcely  modified  in  the  charter 
of  1897,  —  New  York  has  secured  a  fair  degree  of 
official  responsibility  and  honesty,  so  far  as  purely 
financial  matters  are  concerned.  A  few  instances 
of  peculation  and  fraud  have  been  discovered  since 
1873,  and  doubtless  not  a  few  more   have  never 

1  Consolidation  Act,  §§  50-64.  -  Laws,  1890,  Chap.  523. 


INSPECTION  OF  ACCOUNTS  355 

seen  the  light  ;  but  anything  like  the  extensive 
mismanagement  that  prevailed  even  before  the 
Tweed  period  hardly  exists  now.  Serious  evils 
indeed  have  existed  in  the  city  government  during 
the  past  twenty-five  years  ;  inefficiency,  neglect, 
misuse  of  official  power,  have  been  flagrant  enough, 
but  open  and  direct  stealing  of  city  money  has  not 
often  occurred. 

In  indirect  ways,  however,  hardly  within  reach 
of  law,  the  city  treasury  often  suffers.  Among 
these  may  be  mentioned  an  occasional  abuse  of  the 
contract  system.  The  law  provides  that,  in  case 
the  value  of  the  work  or  material  for  any  particu- 
lar purpose  exceeds  $1,000,  it  must  be  performed 
or  furnished  by  contract,  unless  by  three-fourths 
vote  the  council  orders  otherwise.  Contracts  are 
let,  after  due  advertisement  for  bids,  by  the 
heads  of  the  departments  concerned,  but  the 
comptroller  is  always  represented  at  the  opening 
of  proposals.  The  contract  must  be  awarded  to 
the  lowest  bidder,  unless  all  bids  are  rejected. 
Bidders  must  deposit  a  security  for  good  faith, 
and  the  accepted  contractor  must  give  bonds.  The 
comptroller  is  required  to  certify  that  there  remains 
unexpended  and  unpledged,  to  the  credit  of  the 
appropriation  or  account  concerned,  a  sufficient 
sum  to  cover  the  estimated  amount  of  the  con- 
tract, and  this  amount  must  be  treated  thereafter 
as  pledged  to  the  purpose.^     Of  the  almost  inevi- 

1  Consolidation  Act,  §  123. 


356  FINANCIAL  RESPONSIBILITY 

table  abuses  that  have  connected  themselves  with 
this  contract  system,  the  most  common  is  that 
resulting  from  'unbalanced  bids.'  These  are  most 
frequent  and  striking  in  the  case  of  street  grading, 
and  the  term  may  be  most  readily  understood  by 
an  illustration  from  a  job  of  this  kind.  Street 
grading  usually  involves  two  classes  of  work,  — 
rock  excavation  and  earth  excavation.  The  city 
engineers  estimate  the  respective  quantities  that 
will  be  required,  and  the  bids  are  at  so  much  per 
cubic  yard  for  the  number  of  yards  estimated  of 
each  kind.  Not  infrequently  these  rates  are  utterly 
disproportionate  to  the  true  value,  the  one  being 
excessively  high,  the  other  excessively  low ;  that 
is,  the  bid  is  unbalanced.  To  cite  an  actual  case,^ 
the  successful  bid  for  one  job  in  1883  was  for 
20,000  yards  of  rock  excavation  at  2  cents  per 
yard;  10,000  yards  of  earth  at  $1.62^  per  yard, 
the  actual  values  of  such  work  being  perhaps  ;^i.20 
per  yard  for  the  former  and  30  cents  for  the  latter. 
The  product  ($16,650)  of  these  widely  unbalanced 
bids  —  at  the  estimated  amount  of  excavation  of 
each  sort  —  was  lower  than  the  bid  of  any  other 
contractor.  Now,  as  often  happens,  the  relative 
quantities  of  the  two  classes  of  work  turned  out  very 
differently  from  the  estimates ;  there  proved  to  be 
only  9241  yards  of  rock  and  20,576  of  earth;  so 
that  at  the  rates  named,  which  always  hold  re- 
gardless of  the  actual  amount  of  work  done,  the 

1  iVe-cV  York  Tribune,  December  9,  1883,  pp.  I,  2. 


INSPECTION  OF  ACCOUNTS  357 

contractor  ultimately  received  $33,620.  The  ra- 
tionality of  making;  unbalanced  bids  is  simply  that 
the  contractors,  by  their  familiarity  with  the  pecul- 
iar conformation  of  rock  and  earth  in  different 
parts  of  Manhattan  Island,  are  often  able  to  judge 
more  accurately  than  are  the  city  engineers  as  to 
the  true  amount  of  excavation  of  each  class.  Un- 
balanced bids  are  sometimes  also  made  on  jobs  of 
other  kinds. 

This  practice  was  the  cause  of  considerable 
agitation  during  1883  and  1884,  and  a  legislative 
committee  took  up  the  matter.^  Several  flagrant 
instances  of  overcharge  were  brought  forward,  and 
it  was  even  alleged  that  there  was  collusion  on  the 
part  of  city  officers  in  making  intentionally  incor- 
rect estimates.  Probably  some  truth  lay  in  all 
this,  but  it  was  hardly  proved  conclusively.  The 
department  of  public  works  declared  that,  while 
in  a  considerable  proportion  of  its  contracts  bids 
were  unbalanced,  yet  in  the  long  run  the  estimates 
of  the  city  engineers  averaged  so  nearly  correct 
that  practically  no  loss  was  suffered ;  and  further 
maintained  that  it  was  impossible  to  overcome  the 
practice  under  the  existing  law  requiring  the  award 
to  the  lowest  bidder.  The  movement  made  to  enact 
laws  requiring  bids  to  be  in  gross  sums  for  the 
entire  work,  or  otherwise  to  do  away  with  the 
system  of  unbalanced  bids,  finally  subsided  with- 

1  Senate  Documents,  1S84,  No.  57,  pp.  31  if.  See  also  Neiu 
York  'Tribune  for  December,  1883. 


358  FINANCIAL   RESPONSIBILITY 

out  action  being  taken,  and  such  bids  still  continue 
to  be  quite  frequent.  In  the  case  of  street  grad- 
ing, however,  danger  of  loss  has  been  largely  re- 
moved by  taking  greater  pains  in  estimates, 
borings  being  made  for  each  job  with  no  little 
care. 

At  the  time  when  these  charges  just  described 
were  made,  it  was  also  alleged  that  in  a  great 
many  instances  the  provision  requiring  works 
valued  at  over  $1000  to  be  done  by  contract  was 
evaded,  in  violation  of  the  express  terms  of  law, 
by  breaking  up  jobs  into  parts  whose  aggregate 
far  exceeded  that  amount.^  Several  instances  were 
cited  in  which  this  had  doubtless  been  done,  but 
no  way  of  remedying  the  difficulty  has  appeared 
save  by  greater  strictness  in  the  enforcement  of 
existing  laws. 

^  Senate  Document  cited,  pp.  35  ff.      Tribune,  dates  cited. 


CONCLUSION 

§  62.    Concltiding  Remarks. 

A  summary  of  the  history  and  the  present  form 
of  the  financial  system  of  New  York  has  already 
been  given  in  the  introductory  chapters,  and  it  is 
necessary  here  merely  to  call  attention  to  a  few 
general  aspects  of  the  subject.  Our  study  has 
shown  us  that  the  outer  form  and  the  practical 
working  of  the  financial  system  have  been  inti- 
mately dependent  upon  the  condition  of  the  gen- 
eral municipal  administration  and  of  state  and 
national  politics.  The  control  of  the  purse  is 
indeed  naturally  of  prime  importance  in  municipal 
affairs,  and  both  the  form  and  the  spirit  of  the  city 
government  will  be  reflected  very  perfectly  in  the 
financial  management,  while  on  the  other  hand 
any  change  in  the  form  of  the  financial  system 
tends  strongly  to  affect  the  character  of  the  gen- 
eral administration.  Unfortunately,  the  two  influ- 
ences which  have  acted  most  powerfully  in  deter- 
mining the  charter  history  and  financial  history 
of  the  metropolis  have  been  the  desire  to  gain 
political  advantages  and  the  desire  to  check  exist- 
ing abuses ;  and  the  natural  result  has  been  that 

359 


36o  CONCLUSION 

most  changes  in  the  form  of  government  have 
been  mere  patches,  mere  expedients  to  accomplish 
an  immediate  end,  rather  than  carefully  studied, 
systematic  changes.  The  new  cloth  and  the  old 
have  not  always  gone  well  together ;  indeed,  the 
new  has  often  rent  greater  gaps  in  the  old.  In 
1830  and  again  in  1849,  to  be  sure,  somewhat 
more  systematic  attempts  were  made  to  reorganize 
the  city  government,  but  the  former  largely  failed 
to  change  the  real  nature  of  the  administration, 
and  the  political  conditions  soon  after  the  charter 
of  1849  became  such  that  the  government  was 
distorted  out  of  all  semblance  of  reasonableness. 
The  innovations  of  the  Tweed  charter  had  no  logi- 
cal basis ;  it  was  merely  a  device  to  increase  the 
power  of  the  Ring ;  yet  so  great  was  the  strength 
of  precedent,  so  little  the  independence  of  the 
framers  of  the  charter  of  1873,  that  the  anoma- 
lies of  the  previous  law  were  largely  perpetuated. 
Even  the  charter  of  Greater  New  York  has  at- 
tempted to  combine  warring  elements,  simply  be- 
cause precedent  exists  for  them  individually. 

If  the  history  of  the  general  frame  of  govern- 
ment has  been  thus  one  of  inconsistency,  that  of 
the  separate  features  of  the  finances  has  been 
no  less  so.  The  budget  system,  considered  as 
a  system,  has  passed  from  bad  to  worse.  The 
sinking  fund  has  never  been  managed  in  a  scien- 
tific manner ;  temporary  makeshifts  have  modified 
the   system   only  when  its  hardships  became  un- 


CONCLUDING  REMARKS  36 1 

endurable.  The  management  of  special  assess- 
ments likewise  has  been  often  readjusted  in  this 
unsystematic  fashion,  under  the  stress  of  imme- 
diate needs,  and  remains  still  complex  and  in- 
consistent. Above  all  is  the  power  to  authorize 
debt  issues  unduly  complicated.  In  all  these  re- 
spects the  charter  of  Greater  New  York  does  little 
to  effect  improvement. 

It  is,  to  be  sure,  true  that  in  some  ways  this 
method  of  patchwork  legislation  has  its  advan- 
tages. Revolutionary  changes,  even  though  logi- 
cally defensible,  are  often  practically  dangerous, 
not  to  say  impossible.  Especially  where  customs, 
rather  than  laws,  are  adjusted  gradually  in  accord- 
ance with  new  conditions,  the  result  is  apt  to  be 
more  satisfactory  than  if  a  sudden  transition  were 
made.  But  unfortunately  New  York's  charter  and 
financial  history  shows  little  of  this  natural  growth, 
this  evolution.  Such  quite  extraordinary  circum- 
stances as  the  extreme  strength  of  party  feeling 
during  the  war,  as  the  unparalleled  corruption  of 
the  Ring  period,  have  worked  changes  in  the 
municipal  organization  which,  perpetuated  in  writ- 
ten law,  have  remained  unmodified  under  widely 
different  conditions.  Both  the  officers  of  the  city 
and  the  state  legislators,  who  have  had  most  to  do 
with  framing  the  statutes  which  govern  the  city, 
have  for  the  most  part  been  ignorant  of  general 
principles  and,  indeed,  far  from  familiar  with  the 
actual    conditions   which  they   sought  to   remedy ; 


362  CONCLUSION 

while  partisan  motives  likewise  have  largely  deter- 
mined their  action.  The  result  is  that  the  city 
has  not  had  a  frame  of  government  which  worked 
smoothly,  either  because  it  was  logical  or  because 
it  was  a  natural  outgrowth  ;  the  government  has 
been  both  theoretically  and  practically  one  of  dis- 
cord and  confusion. 

Fortunately  civic  spirit  in  the  city  is  rapidly 
growing.  Reform  movements,  indeed,  have  been 
often  mere  flurries,  subsiding  as  soon  as  the  city 
elections  are  over.  We  must  not  hope  for  any 
sudden  and  complete  change  in  the  people  or  in 
the  form  of  the  administration.  But  there  is  grow- 
ing a  deeper  movement,  one  which,  aims  at  thor- 
ough understanding  of  needs  and  of  methods,  and 
from  this  ultimately  will  come  better  things.  So 
complex  are  many  of  the  financial  details  in  the  city 
government  that  it  can  scarcely  be  expected  that 
the  body  of  the  citizens  will  soon  thoroughly  com- 
prehend them  and  demand  improvement.  There 
is  more  hope  for  reform  in  the  finances  by  a  reor- 
ganization of  the  general  administration,  and  above 
all  by  the  election,  and  the  reelection,  of  able  and 
disinterested  public  officials.  Nevertheless,  the 
anomalous  nature  of  the  present  budget  system, 
even  as  modified  by  the  Greater  New  York  charter, 
the  undue  complication  of  authorities  in  enterprises 
involving  special  assessments  or  bond  issues,  the 
unscientific  management  of  public  works  and  fran- 
chises in  the   past  —  these   at  least   are  financial 


CONCLUDING  REMARKS  363 

matters  which  every  citizen  should  and  can  under- 
stand, and  in  which  he  should  insist  upon  reform. 
It  would  seem,  moreover,  that  popular  interest 
might  be  sufficient  to  demand  that  the  new  bureau 
of  municipal  statistics,  which  is  to  be  established, 
shall  publish  in  its  reports,  and  in  newspapers 
of  general  circulation,  brief  and  clear  statements 
concerning  the  city  finances,  avoiding  the  technical 
complications  which  now  exist  in  the  accounts, 
and  explaining  in  simple  terms  the  significance 
of  the  figures  presented.  Such  comprehensible 
financial  statements  would  surely  prove  of  great 
practical  vajue. 


APPENDIX 


TABLE   OF   WORKS   CITED 

Note.  —  Many  of  the  authorities  consulted  consist  of  long 
series  of  annual  publications,  and  minor  changes  in  title  from 
year  to  year  often  occur.  The  present  form  of  title,  in  the 
case  of  series  continued  up  to  this  time,  is  employed  in  the 
citations.  The  deviations  in  the  earlier  names  are  not  suffi- 
cient to  cause  the  reader  any  difficulty  in  discovering  the 
works  refeiTed  to.  Not  a  few  of  the  documents  and  series 
cited  separately,  and  which  are  bound  as  separate  volumes, 
appear  likewise  in  the  sets  of  collected  documents  published 
from  year  to  year  by  the  city  of  New  York  and  by  the  state 
of  New  York.  In  addition  to  the  works  below,  a  large  num- 
ber of  unofficial  pamphlets,  circulars,  speeches,  etc.,  have  been 
consulted  for  impressions  as  to  the  general  political  situation 
and  state  of  public  opinion. 

PUBLICATIONS  OF  THE  STATE  OF  NEW  YORK 

(Except  where  stated,  published  at  Albany) 

Constitutions  of  the  state  of  New  York,  adopted  1821,  1846, 

1894.     With  amendments. 
Proceedings  and  debates  of  the  constitutional  convention  of 

the  state  of  New  York  held  in  1867  and  1868.     Albany, 

1868. 
Records  of  New  Netheriand.    English  manuscript  translation. 
Laws  of  the  province  of  New  York  passed  from  1691  to  1775- 
Editions:    1691-1773,  Peter  Van  Schaack.     2  vols.     New 

York,  1774. 

365 


366  APPENDIX 

1691-1762,  Livingston  &  Smith.     2  vols.     New  York, 

1752,  1762. 
1773,  1774,  1775,  original  folios,  no  title-page. 
Laws  of  the  state  of  New  York  passed  at  the  ist  to  120th  ses- 
sions of  the  legislature,  1777-1897. 
Editions:   1777-1801,  reprinted  by  state.     Albany,  1886. 
1 778-1 792,  Greenleaf.     3  vols.     New  York,  1798. 
1 802- 1 804,  Webster.     Albany,  1804. 
1805-1897,  original  official  editions. 
Some  of  the  specific  laws  —  the  charters,  etc.  —  are  so 
important  that  they  might  be  mentioned  here  as  separate 
documents,  but  their  location  may  be  found  by  consulting 
index   and   footnotes   of  this   book.      The  present  law 
governing   New  York   city  is :    "  An  act  to  consolidate 
into  one  act  and  to  declare  the  special  and  local  laws 
affecting  public  interests  in  the  city  of  New  York."    Laws 
of   1882,  Chap.    410.     The  Greater  New  York   charter 
will  be  found  in  separate  form  as  well  as  in  the  laws  of 
1897,  Chap.  378. 
Journal  of  the  senate,  ist  to  120th  sessions,  1777-1897. 
Journal  of  the  assembly,  ist  to  120th  sessions,  1777-1897. 
Documents  of  the  senate,  53d  to  120th  sessions,  1 830-1 897. 

Before  1830,  bound  with  senate  journaL 
Documents  of  the  assembly,  53d  to  120th  sessions,  1830-1897. 
Before  1830,  bound  with  assembly  journal. 

These  collective  sets  of  documents  contain  all  the  pub- 
lications of  the  state  except  those  specifically  named  in 
this  table.     Those  most  noteworthy  are  :  — 

Tilden  Commission.     Report  of  the  commission  ap- 
pointed to  devise  a  plan  for  the  government  of  cities  in  the 
state  of  New  York.     Assembly  documents,  1877,  No.  68. 
Fassett  Committee.    Testimony  taken  before  the  senate 
committee  on  cities.    5  vols.    Part  V  contains  the  conclu- 
sions of  the  committee.    Senate  documents,  i89i,No.  80. 
Bills  of  the  senate,  1 830-1 897. 
Bills  of  the  assembly,  1830-1897. 


TABLE    OF   WORKS    CITED  367 

Reports  of  cases  decided  in  the  court  of  appeals  (New  York 
Reports),  vols.  1-153,  1847-1897.     Albany  or  New  York. 

Reports  of  cases  in  the  supreme  court  of  the  state  of  New 
York  (Hun's  Reports),  vols.  1-99,  1874-1897. 

Public  papers  of  the  governors,  1777-1896. 

PUBLICATIONS   OF   THE   CITY   OF   NEW   YORK 

(All  published  at  New  York) 

The  City  Record:  official  journal.  Daily,  June  24,  1873-date. 
This  is  devoted  solely  to  city  reports,  advertisements, 
etc.  It  contains  all  the  proceedings  and  reports  of  the 
city  council  and  departments,  except  the  comptroller''s 
report  for  the  year  ending  December  31.  Many  of  these 
reports,  especially  annual  ones,  are  also  printed  in  sepa- 
rate form,  but  for  convenience  the  City  Record  is  usually 
cited  in  the  text. 

Charters  of  the  city  of  New  York:  Dongan  charter,  1686; 
Montgomerie  charter,  1730,  granted  by  royal  governors. 
Published  in  all  compilations  of  city  laws,  and  in  the 
corporation  manuals  from  1 850-1870.  Charters  granted 
by  the  state  legislature  in  1830,  1849,  1^57'  1870,  1873, 
1882  (consolidation  act),  1897.  See  Laws  of  New  York 
for  those  years. 

Laws  and  ordinances  ordained  and  established  by  the  mayor, 
aldermen,  and  commonalty.  The  compiler  of  the  ordi- 
nances in  1 838- 1 839  knew  of  the  following  previous  edi- 
tions :  1763,  1786,  1793,  1797,  I799»  1 80 1,  1803,  1808,  181 2, 
1817,  1821,  1823,  1827,  1834.  Also  editions  in  1845,  1859, 
1866,  1880. 

Records  of  the  burgomasters  and  schepens  of  New  Amster- 
dam.    English  manuscript  translation. 

Minutes  of  the  city  council.     Manuscript,  1665-1830. 

Proceedings  of  the  board  of  aldermen,  vols.  1-224,  1830-1897. 

Proceedings  of  the  board  of  assistant  aldermen  (or  council- 
men),  vols.  1-136,  1830-1875. 


368  APPENDIX 

Proceedings  of  the  council  approved  by  tlie  mayor,  vols.  1-64, 
1831-1896. 

Documents  of  the  board  of  aldermen,  1830-1878. 

Documents  of  the  board  of  assistant  aldermen,  1830-1875. 

These  two  sets  of  documents  contain  often,  though 
not  always,  the  annual  comptroller's  reports,  and  various 
other  series  which  also  appear  separately  bound.  The 
most  important  document  cited,  aside  from  series,  is : 
''  Report  of  the  special  committee  appointed  to  investi- 
gate the  Ring  frauds,  together  with  the  testimony." 
Documents  of  1877,  No   8. 

Proceedings  of  the  board  of  supervisors  of  the  county  of  New 
York,  1 809- 1 874.  1 809- 1 850  first  printed.  New  York, 
1865. 

Documents  of  the  board  of  supervisors  of  the  county  of  New 
York,  1857-1874.  Bound  with  proceedings  till  1864. 
These  contain  the  comptrollers  county  reports,  estimates, 
etc. 

Annual  report  of  the  comptroller  of  the  city  for  the  year  end- 
ing December  31,  1830-1870,  1880-1896.  Also  for  1879 
in  City  Record. 

Annual  report  of  the  comptroller  of  the  city  for  the  year  end- 
ing August  I,  1852-1858,  1873-1897.  For  1873-1879, 
1883-1896  only  in  City  Record.  Several  of  these  reports 
are  for  the  year  ending  June  30,  and  titles  vary.  See 
as  to  legal  requirements  concerning  comptrollers'  reports, 
ante,  p.  351. 

Reports  of  the  commissioners  of  accounts,  quarterly,  semi- 
annual, and  annual.  \\\  City  Record,  \%']T)-\Z()'].  Some- 
what irregular  as  to  date  of  issuance  and  period  covered. 
At  present  the  annual  report  shows  the  state  of  the 
treasury  November  30. 

Annual  report  of  the  comptroller  exhibiting  the  receipts  and 
expenditures  of  the  county  of  New  York  for  the  years 
1859-1870. 

Proceedings   of  the   joint   investigating  committee   of  super- 


TABLE    OF   WORKS   CITED  369 

visors,  aldermen,  and  associated  citizens  appointed  to  ex- 
amine the  public  accounts.     New  York,  1872. 
Minutes  of  the  board  of  estimate  and  apportionment,  1871- 

1897.     Also  in  City  Record  ^it^r  1873. 
Annual  messages  of  the  mayors  for  the  years  1 830-1897. 
Annual  report  of  the  board  of  commissioners  of  the  Central 

Park.     Nos.  1-13,  1857-1870. 
Report  of  the  comptroller  on  the  establishment  of  a  sinking 

fund  for  the  redemption  of  the  city  stock.     New  York, 

1813.     8  pages. 
Journal  of  the  city  convention  of  1829.     In  Kent's  edition  of 

the  city  charter,  1834. 
Journal  of  the  convention  in  relation  to  the  charter  of  the  city 

of  New  York,  1846. 
Manual  of  the  corporation  of  the  city  of  New  York  for  the 

years  1841-1866,  1868-1870.     Edited  by  D.  T.  Valentine 

from  1 842-1 866. 


MISCELLANEOUS 

Adams,  Henry  C.  Public  debts :  an  essay  in  the  science  of 
finance.     New  York,  1887. 

Black,  George  Ashton.  The  history  of  municipal  ownership 
of  land  on  Manhattan  Island.  New  York.  1891  Co- 
lumbia College  studies  in  history,  economics,  and  public 
law,  vol.  I,  No.  3. 

Brooklyn,  Comptrollers  report,  1895. 

Citizens'  association  of  New  York.  Annual  reports  and 
numerous  pamphlets  published  from  1864- 1874.  Col- 
lected by  the  association  in  one  volume,  no  title-page. 

Committee  of  seventy.  An  act  to  reorganize  the  local  govern- 
ment of  the  city  of  New  York.  New  York,  1872.  Also 
Assembly  bill  118,  1872. 

Durand,  E.  Dana.     The  city  chest  of  New  Amsterdam.     In 
Half  Moon  series.     New  York,  1897. 
2  B 


370  APPENDIX 

Green,  Andrew  H.  Municipal  debt  of  the  city  of  New  York. 
New  York,  1874.     24  pages. 

Green,  Mrs.  J.  R.  Town  life  in  the  fifteenth  century.  New 
York,  1894. 

Hoffman,  Murray.  A  treatise  upon  the  estate  and  rights  of 
the  city  of  New  York  as  proprietors.     New  York,  1853. 

O'Callaghan.  E.  B.  History  of  New  Netherland.  New  York, 
1846. 

New  York  Tributte,  1 842-1 897. 

New  York  Times,  1 851-1897. 

New  York  Commercial  Gazette,  1829. 

Parton,  James.  The  government  of  the  city  of  New  York. 
North  Ajiierican  Revieiv,  vol.  103,  1866. 

Paulding,  J.  Affairs  and  men  of  New  Amsterdam  in  the  time 
of  Governor  Peter  Stuyvesant.     New  York,  1843. 

Rosewater,  Victor.  Special  assessments :  a  study  in  munic- 
ipal finance.  New  York,  1893.  In  Columbia  College 
studies  in  history.  economics,and  public  law,  vol.  2,  No.  3. 

Ross,  Edward  A.  Sinking  Funds.  Baltimore,  1892.  In 
Publications  of  American  Economic  Association,  vol.  7, 
Nos.  3-4. 

Schwab,  J.  C.  History  of  the  New  York  property  tax.  Balti- 
more, 1890.  In  Publications  of  American  Economic 
Association,  vol.  5,  No.  5. 

Seligman.  Edwin  R.  A.  The  shifting  and  incidence  of  taxa- 
tion. Baltimore.  1892.  In  Publications  of  American 
Economic  Association,  vol.  7,  Nos.  1-2. 

Essays  in  taxation.     New  York,  1895. 

Shaw,  Albert.  Municipal  government  in  Great  Britain  New 
York,  1895. 

Municipal    government    in   continental    Europe.      New 

York,  1895. 

Statistisches  Jahrbuch  der  deutschen  Stadte,  1 891-1896. 
Breslau. 

Tilden,  Samuel  J.  The  New  York  city  ring  .  .  .  reply  to  the 
New  York  Times      New  York,  1873. 


TABLE    OF   WORKS   CITED  37 1 

Valentine  D.  T.  Political  history  of  New  York.  In  Cor- 
poration Manual  for  1854. 

Financial  history  of  the  city  of  New  York.  In  Corpora- 
tion Manual  for  1859. 

Union  League  Club.  Alleged  frauds  in  the  city  government 
of  New  York.     New  York,  1884. 

United  States  Census,  1890.     Wealth,  Debt,  and  Taxation. 

Wingate,  Charles  F.  An  episode  in  municipal  government. 
North  American  Review,  vols.  119,  120,  121,  123. 


372 


APPENDIX 


FINANCIAL  TABLES 

The  following  tables  are  compiled  for  the  most  part  directly 
from  the  comptroller's  annual  reports.  In  some  cases  sum- 
mary tables  have  been  followed ;  in  others  it  has  been  neces- 
sary to  consult  the  City  Manual,  the  proceedings  of  the 
Council,  the  report  of  the  Fassett  Committee,  and  other 
sources.  Individual  references  cannot  be  conveniently  cited. 
For  1 87 1  to  1873  some  figures  are  entirely  wanting,  no  re- 
ports, or  only  partial  ones,  being  published.  The  e.xplanations 
in  the  text  should  be  used  in  connection  with  the  tables. 

TABLE   I 

Budget,  Taxes,  and  Special  Assessments 


Year 


Appropria- 
tions (from 
'       Taxes) 


1830 
1831 
1832 
1833 
1834 
1835 
1836 

1837 
1838 

1839 
1840 
1841 
1842 

1843 
1844 

184s 
1846 
1847 


1850 
1851 
1852 
1853 
1854 
1855 
1856 

1857 


509,178 

572.104 

665.385 

971.854 

835.605 

965,602 

1,085,130 

1,244,972 

1,486,993 

1,352,826 

1.354.835 
1.394.836 
2,031,382 
1.747.516 
1,988,118 
2,096,191 
2,526,146 
2,581,726 

2,715.510 
3,005,762 
3,230,180 
2,924,384 

3.378,33s 
5,069,650 

4.841.255 
5.843.822 

7.075.425 
8,066,566 
8,621,091 


Appropria- 
tions LESS 
State  Tax 


1,832,462 

1.952.194 
2,379,208 
2,458,200 
2,588,414 

2.851,437 
3,100,749 

2.764.325 
3,016,325 
4,836,269 
4,456,288 
5.372.204 
6.340.482 
7,171,482 
7,210,383 


Assessed 
Valuation 


125,288,518 
137.560,259 
144,902,328 
166,491,542 
186,548,511 
218,723,703 
309,500,020 
263,747.350 
264,152,941 
270,869,019 
252,233,515 
251.194.920 
237.805,651 
229,229,079 
236,727,143 

239.995.517 
244,952,004 

247,153,299 
254.163,523 

256,197.143 
286,061,816 
320,110,857 
351,768,426 
413,631,382 
462,021,734 
486,998,278 
511,740,491 
521.175.252 
531,194,290 


Tax 
Rate 


cents 
•42 
.41 

.46 
•59 
■45 
.46 

•36 

•47 
•56 
•51 
•53 
■58 
.80 

•79 

.86 

.88 

I. OS 

1.05 

1.08 

1. 18 

1. 14 

.92 

•97 
1.23 
1.05 
1.20 
1.38 
1.56 
1.64 


Expendi- 
tures ON 

Assessments 


202,301 
229,937 
242,900 
268,384 
389,184 
353.381 
805,455 
1. 113.838 
746,873 
506,553 
670,927 
213,619 
144,663 
99,186 
57.683 
137.767 
259.495 
408,685 
570,888 

432.565 
619,458 

943.615 

1. 074. 137 

1,190,485 

1,408,938 

2,378,817 

926,032 

429.550 

101,941 


FINANCIAL    TABLES 


?>7?> 


TABLE   I  {Continued) 


Total 
Year      Appropria- 
tions 

Appropria- 
tions LESS 
State  Tax 

Assessed 
Valuation 

Tax 
Rate 

Expendi- 
tures ON 
Assessments 

i8S9 
i860 
1861 
1862 
1863 
1864 
1865 
1866 
1867 
1868 
1869 
1870 

$ 
10,225,399 
10,121,358 
11,551,016 
11,103,746 
12,945,212 
14,875,702 
19,147,919 
18,890,398 

23,653,324 
25,928,758 
26,485,847 
30,906,263 

$ 

8.897.393 

8,789,100 

9,442,381 

8,890,816 

10,404,655 

12,138,622 

16,123,919 

15,987,549 
19,762,780 
20,364,332 
21,998,927 
26,001,762 

$ 
551,923.122 
577,230,656 

581,579,971 
571,967.345 
594,196,813 
634,615,890 
608,784,355 
736,988,058 
831,669,813 
907,815,529 
964,257,164 
1,047,427,049 

cents 
1.80 
1.69 
1.60 

1-73 
2.03 

2.l5 

2.99 
2.30 
2.67 
2.66 
2.27 
2.25 

$ 
2,059,701 
1,879,470 

942,454 
1,318,356 

642,504 
1,661,767 

1,178,765 
1,736,196 
1,829,644 
3,090,040 
9,071,406 
9,772,509 

Year 

Total 
Appropri- 
ations 

Appropria- 
tions LESS 
State  Tax 

Contin- 
gentAppro- 
priationsi 

Assessed 
Valuation 

Tax 
Rate 

Expendi- 
tures ON 
Ass'ts. 

1871 

1872 

1873 
1874 
1875 
1876 
1877 
1878 
1879 
1880 
1881 
1882 
1883 
1884 
1885 
1886 
1887 
1888 
1889 
1890 
1891 
1892 

1893 
1894 
1895 
1896 

1897 

$ 
31,478,148 
34,058,680 
30,154,187 
34,872,391 
36,171,472 
34,934,801 
31,005,805 
30,104,077 
30,247,750 
29,668,771 
31.759.205 
29.434.031 
30,676,785 
34,067,585 
34,078,405 
33,802,320 
34,343,022 
37,051.053 
34,983,385 
35,148,097 
35,992,891 
35,881,205 

37.444,154 
38,664,257 
40,076,960 
46,496,571 

An  A9,f,on'7 

$ 
? 

28,313,681 

24,036,822 

27,098,910 

28,159,086 

27,701,611 

26,842,921 

26,192,751 

26,496,688 

26,097,439 

27,488,445 
26,606,744 

27,457,815 
29,815,007 
30,494,964 
29,602,714 
30,084,495 
32,986,864 
32,950,231 
30,628,445 
32,342,361 
32,482,701 
33,889,696 
34.551,981 
36,522,640 
40.094,561 

$ 

? 

? 
16,356,059 
17,583,147 
17,404,322 
16,163,704 
16,099,415 
15,848,069 
16,542,087 

17,445,653 
18,583,102 
18,140,113 

18,874,373 
21,146,521 

23,046,393 
21,289.312 
21,716,900 
24,096,859 
24,137.356 
24,242,019 
25,883,368 
27,140,501 
27,264,663 
27,540,791 

29,461,355 
31,538.061 

$ 
1,076,253,633 
1,104,098,087 
1,129,240,573 
1,154,029,176 
1,100,943,699 
1,111,054,343 
1,101,092,093 
1,098,387,775 
1.094,069,335 

1,143,765,727 
1,185,948,098 
1.233,476,398 
1,276,677,164 

1,338,298.343 
1,371,117,003 
1,420,968,286 
1,507,640,663 
1,553,422,431 
1,603,839,113 
1,696,978,390 
1.785,857,338 
1,828,264,275 
1-933,518,529 
2,003,332,037 
2,016,947,663 
2,106,484,905 

cents 
2.17 
2.90 
2.50 
2.80 
2.94 
2.80 
2.65 
2-55 
2.58 

2.53 
2.62 
2.25 
2.29 
2.25 
2.40 
2.29 
2.16 
2.22 

1-95 
1.97 
1.90 
1.85 
1.82 
1.79 
1.72 
2.14 

$ 
? 
? 
? 

6,099,130 

5,639,479 
5,004,14s 

1,559,433 

1. 175.099 

577.369 

729,265 

1.014,951 
2,446,903 
1,848,098 

1,438.243 
1,358,107 
922,140 
1,967,301 
2,174,858 
1,854,520 

1-994-233 
2,522,776 

2,733,909 
4,724,339 
3,623,130 
4,454,567 
4,261,649 

,  J7 

1  I.e.,  total  appropriations,  less  state  taxes,  interest,  and  redemption  payments 


374 


APPENDIX 


TABLE   II 
City  Debt — 1 830-1896 


Year 


1830 
1831 
1832 
1833 
1834 
1835 
1836 

1837 
1838 
1839 


1842 

1843 
1844 

184s 
1846 
1847 
1848 
1849 
1850 
1851 
1852 
1853 
1854 
185s 
1856 

1857 
1858 

1859 
i860 
1861 


Funded 


570,300 
500,000 
500,000 
500,000 
500,000 
1,500,000 

2,939.487 
3.398.687 

S.034.740 
7,716,105 
10,442,369 
12,481,661 
14,096,701 

14.333.637 
14,476,986 
14,657,088 
14,830,194 
14,851,783 
15,016,783 
15,241,783 

15.037.383 
15,288,908 
14,890,856 
14,910,856 
15,114,856 
15,204,856 
15,384,156 
17.S93.168 
17,224,898 
17,801,489 
20,305,344 
22,343,344 


Assessment 


400,000 
200,000 


Revenue 


55. 000 

284,925 

100,000 

800,000 

649,900 

1,150,000 

1,095,700 

1,098,200 

1,898,200 

1,925,600 


432,000 
498,000 
793.400 
542,500 
499.500 
139.978 
200,000 
600,000 
800,000 
414,230 
310,000 
347.947 
587.433 
260,000 
600,700 
1,170,250 

1.393.173 
1,508,092 
1,956.253 

2.273.453 
766,050 
869,340 
1,434.125 
1. 945. 561 
3.569.009 
3,600,600 

4.489.36s 
3,490,900 
4,368,700 
4.976,250 
1,230,100 
1,080,900 


Sinking 
Fund 


227,744 
257,087 
398.590 
206,155 

254,465 
261,050 

339.655 

382,093 

363.103 

618,368 

699.133 

831.09s 

1.018,975 

1,266,693 

1,499,856 

2,065,530 

2,284,607 

2,485,949 

2,994.472 

3,690,866 

3,583,206 

4,052,069 

3,896,266 

4,631,167 

5.171,308 

S.594,719 

4,936.378 

5,093,880 

5.277,55s 
6,364.394 
5,107,703 
6,262,542 


Net  Bonded 
Debt 


774,556 
741.913 
894,810 

836,344 

745.034 

1,378,928 

2.799.832 
3,016,594 
5,471,637 
7-511.967 
10,453.236 
12,198,513 

13,665.159 
13.326,944 
13.577.830 
13,761,808 
13.935.760 
13,873,826 
13.978,564 
13.774,370 
12,220,227 
12,106,179 
12,483,715 
12,510,175 
13.612,557 
14,010,737 

15.587.053 
17,140,188 

17.411,743 
17.511.555 
18,325,941 
19,087,302 


1  In  addition  to  these  $1,600,000  of  assessment  bonds  for  Central  Park  assess- 
ments were  outstanding  from  1856  to  i36o. 


FINANCIAL    TABLES 
TABLE  II  (^Continued) 


375 


Year 

Funded 

Assessment 

Revenue 

Sinking 
Fund 

Net  Bonded 
Debt 

$ 

$ 

$ 

$ 

$ 

1862 

25,738,042 

2,330,000 

855.300 

7.233.421 

21,689,921 

1863 

32,157,342 

2.013,000 

7.985. 151 

26,185,191 

1864 

40.188,824 

1.692,000 

700,800 

8.767.393 

33,814,231 

1865 

41,347,424 

2,019.200 

2.276,100 

9,669.127 

35.973.597 

1866 

42,154.176 

2,042,600 

991,000 

11,229,231 

33.958.545 

1867 

43.584.776 

2,904,072 

417.325 

13.984.313 

32,721,861 

1868 

44.586,858 

4.395.872 

3,222,700 

16,501,109 

35,704.321 

1869 

56,018,879 

7,608,572 

2,412,600 

18,321,313 

47.717.738 

1870 

68,998,146 

10.525.100 

11,966,200 

18,115,894 

73.373.522 

1871 

87,238,608 

14,944,000 

6,369.100 

20.182,321 

88,369,386 

1872 

93,773.659 

16.927,372 

8,114,197 

23.348,074 

9S.467.154 

1873 

99,492,219 

21,927.372 

10,449,979 

24.841,100 

107,028,471 

1874 

118.241,557 

20,851,000 

2,711,200 

26,823,788 

114,979,969 

1875 

119,056,903 

21,322,200 

4.142,927 

27,748,307 

116,773,724 

1876 

119,631,313 

22,371,400 

6,104,844 

28,296,247 

119,811,310 

1877 

121.440,133 

21,329,500 

6.051.424 

31,120,315 

117,700,742 

1878 

126,128.815 

13,481.500 

5.951.875 

32,143,787 

113,418,403 

1879 

123,145.333 

13.262,100 

6,039,966 

33,021.985 

109,425.414 

1880 

123,176,919 

10,358,100 

5.524.244 

32,993,024 

106,066,240 

1881 

124,724,407 

9,676,100 

4.328,09s 

36,110,300 

102,618.301 

1882 

119,817,241 

10.657.09s 

4.246,534 

34,332,388 

100.388,432 

1883 

120,707,475 

9.973.095 

2,983,883 

38,134.544 

95.529.909 

1884 

121,319,320 

5.551.817 

2.358,825 

34.823.735 

94,406,229 

1885 

122,443,239 

3.032.000 

3,670,525 

36.113,813 

93,031,951 

1886 

122,650,735 

3.332.000 

5.618,367 

41.205,470 

90.395.633 

1887 

124,500,719 

3,768.000 

4.554.346 

39,521,884 

93,301,181 

1888 

128,347,09s 

4,098,000 

3.302,730 

44,324,690 

91,423,13s 

1889 

138.016.028 

3,823,000 

2,462,187 

45.638,142 

98,663,072 

1890 

142,198,022 

4.173,000 

207,188 

48,513,792 

98,064,418 

1891 

145,500,869 

4,798,000 

34.600 

52.783.433 

97.550,036 

1892 

149.344,171 

5,817,802 

366.083 

56,532,406 

98,995,651 

1893 

159,050,898 

7.419.95 1 

666,073 

65,708,442 

101,428,481 

1894 

165,393.039 

8,598,042 

1.699.033 

69,912,260 

105,777.854 

189s 

176,233,167 

9.355.429 

2,564,510 

75.703.087 

112,450,020 

1896 

186,189,242 

9,718,448 

2,433,326 

77.630,491 

120,710.526 

376 


APPENDIX 


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378 


APPENDIX 


TABLE   IV  — THE   BUDGET  i 

Annual  Modifications  in  the  Estimates 

1874-1897 


Year 

Departmental 

Provisional 

Rectified  by 
Aldermen 

Final 
Estimates  = 

1874 

39,491.051 

38.530,299 

41,662,090 

39,138,945 

1875 

38.693.052 

36,657,062 

36,864,572 

36,171,472 

1876 

37.893.682 

35,423,231 

35,547.691 

34.904,269 

1877 

33.987.530 

32,089,970 

33,186,696 

30,984,269 

1878 

31,848,282 

30,082,385 

30,346,085 

30,079,077 

1879 

30,976,072 

29,284,470 

29,962,821 

30,007,097 

1880 

30,698,728 

29,297,072 

29,328,872 

29,642,991 

1881 

32,066,645 

31.524.744 

31,621,456 

31,354,322 

1882 

31,398,030 

29,212,623 

29,710,596 

29,412,831 

1883 

31.999.558 

30,327,864 

30,711,762 

30,593.535 

1884 

35.253.376 

33,373.157 

33,856,947 

34,046,165 

1885 

34,888,217 

33.472.740 

33.977.902 

33,881,905 

1886 

43.306,569 

36,054,325 

37,019,856 

35.736.320 

1887 

36,600,43s 

34,101,619 

34.759.844 

34,157,273 

1888 

38,868,242 

36,689,186 

37,091,186 

37.051.053 

1889 

40,455,009 

37,029,604 

37,227,638 

37,637,069 

1890 

39.683,638 

36,264,249 

36.295,449 

35,148,097 

1891 

38,223,822 

34.600,336 

34.745-336 

35,960,891 

1892 

38,264,395 

35.905.212 

36,115,212 

35,881,205 

1893 

39,062,517 

36,521,008 

36,652,008 

37.444,154 

1894 

43,286,791 

38,296,633 

38,413,133 

38,664,257 

1895 

43,432,713 

38.699,593 

38,799,593 

39,976,960 

1896 

50.505.675 

45,154,701 

45,154,701 

46.496,571 

1897 

47,439.009 

45,372,186 

45,373.386 

49486,297 

1  Compiled  from  City  Record. 

2  Note  that  these  are  not  always  the  same  as  the  ultimate  appropriations  as 
given  in  Table  I. 


FINANCIAL    TABLES 


379 


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MLNS 

1875  76   77  78    79    80    81  82   83    81   85    80    87  88    89   90    91   92   93   91    95 

MLNS. 

1     1     1     1     1     1     1     1     M     '     1     M     1     1 
DIAGRAM      C 

A 

30 

FIXED  AND 

/ 

CONTINGENT  APPROPRIATIONS 

y 

' 

1874 — 1896 

/ 

A Contingent  appropriations 

/ 

-- 

Fixed  appropriations 

/ 

°  — —(state  taxes,  interest,  redemption.)/ 

25 

/ 

25 

C- - — Interest  on  debt                  ,       , 

/ 

D.. State  taxes                     ,     j 

Ec 

Re 

de 

yipt 

ion 

of 

k 

3t 

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6 

382 


MLNS 

1875  76    77   78    79  80    81    82   83  81   85   86    87    88    89   90  91  92  93   91    95 

MLNS. 

6 

1      1       1      1      1      1       '      1       >      1      1       1      1       1 

DIAGRAM    D 
CHIEF  HEADS  OF  BUDGET 

1874—  1896 
A                         Police 

/ 

\ 

/ 

a' 

B/ 
/ 

6 

D Fire  department 

/ 

/ 

/ 

E Charities  and  correction 

F„ Street  cleaningji                 ^   y^ — 

/ 

/ 

.- 

y 

i 

P                         Asylums  and 

^ institutions 

Parks  (str 

1 

\ 

/ 

/ 

\ 

y 

1 

H 

imp's  23d  &; 
24th  wards)/ 

1 

\ 
y 

/- 

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3 

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^ 

1871  70    Tti    77   78   79    80   81   82   83   84   85   86   87   88    89   90   91    92  93   91    95   9G        | 

383 


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INDEX 


Accounts,  commissioners  of,  estab- 
lished, 162  ;  duties,  351-353. 

Accounts,  imperfection  of  early 
system,  50;  reorganization,  1859, 
III ;  confusion  of  sinlcing  fund, 
342;  description  of  system,  345- 
349;  reports,  349-352;  inspec- 
tion, 352-354. 

Accumulated  debt  bonds,  124. 

Advertising,  printing,  etc.,  transfers 
of  appropriations  for,  90 ;  judg- 
ments for,  91 ;  Ring  expendi- 
tures, 114,  139. 

Aldermen,  president  of,  member 
of  board  of  estimate,  162,  253 ; 
his  influence,  274;  see  Council. 

Almshouse  department,  expendi- 
tures, 1798,  30;  1830,  31;  finan- 
cial independence,  82;  expendi- 
tures, 1850-1869,  83;  changed  to 
charities  and  corrections,  80. 

Appointment  of  officers,  exclusive 
power  of  council,  37,  42;  abuses 
by  council,  62,  of  police,  62,  74; 
restored  to  mayor,  77 ;  under 
Ring  charter,  126;  proposed  sys- 
tem of  Committee  of  Seventy, 
157;  council  to  confirm,  160; 
power  of  confirmation  removed, 
165,  172. 


rapid  increase,  75  ;  power  of  in- 
dependent departments,  81-87; 
of  county  government,  85,  86; 
legislative  control,  88-97;  addi- 
tional, 1850-1856,  89;  abuse  of 
transfers,  90;  three-fourths  vote 
required,  97  ;  submitted  to  mayor 
and  comptroller,  94,  97,  127 ;  by 
board  of  estimate  and  apportion- 
ment, 131 ;  juggling  by  Tweed 
Ring,  132-134;  increase,  1869- 
1871,  138;  special  revisions  au- 
thorized, 1872-1875,  152,  153; 
proposed  system  of  Committee  of 
Seventy,  157  ;  outline  of  present 
system,  253-257;  in  Greater  New 
York,  257,  277-281 ;  weakness  of 
council,  258-261;  fixed  charges 
and  legal  restrictions,  261-263, 
274;  actual  procedure  and  mo- 
tives, 264-275 ;  underestimate  to 
influence  elections,  276 ;  criticism 
of  system,  277-281 ;  Tilden  com- 
mission plan,  281-284;  analysis 
of  budget,  285-289 ;  progress 
since  1871,289-294;  accounts  of, 
346  ;  tables  of,  372,  374,  376-378  ; 
diagrams,  380-385 ;  see  also  Es- 
timate and  apportionment. 
Appropriation  account,  178. 


Appropriations,  city,  absence  of  Armories,  fraudulent  Ring  expendi- 
system  to  1830,  29;  system  in- |  tures,  114,  140;  bonds  for,  332. 
troduced,  44;  imperfect  working,  ,  Art,  Museum  of,  expenditures,  330. 
46-50;  evil  of  additional,  48 ;  Assessment  bonds,  introduced, 
further  slight  regulations,  1853,  1852,108;  rapid  increase  under 
70;  great  additional,  1852,  72;!  Ring,  145;  funding,  1878,  209; 
2C  385 


386 


INDEX 


payment  from  sinking  fund,  209  ; 
constitutional  limit  applies,  211, 
297;  description  of,  216;  no 
special  law  for  issue,  300 ;  recent 
reduction  of  amount,  323. 

Assessment  of  taxes,  increase  of 
valuation,  1800-1830,  31 ;  method 
of,  187,  188 ;  evasion  of  personal 
property,  190-195  ;  on  real  estate, 
195-197  ;  for  state  taxes,  196 ;  table 
of  valuations,  372 ;  diagram,  380. 

Assessments,  board  of  revision  of, 
established,  109  ;  powers,  217. 

Assessments  for  local  improve- 
ments, 201-220 ;  see  Special 
assessments. 

Assessors,  board  of,  217,  218; 
deputy,  187,  192. 

Assistant  aldermen,  no  power  in 
tax  levy,  28 ;  name  changed  to 
councilmen,  73. 

Asten,  Thomas  B.,  tax  commis- 
sioner, 268. 

Audit  of  accounts,  fraudulent 
'special,'  1868,  122;  by  ad  in- 
terim board,  1870,  128  ;  general 
process,  346-349  ;  bureau  of,  347. 

Auditors,  in  finance  department, 
347- 

Barker,   E.   P.,  tax  commissioner, 

272. 
Baths,  proposed  appropriation  for, 

260. 
Berlin,  street  railways  in,  248  ;  gas 

plant,  249. 
Boards,    see    Departments,   Asses- 
sors,    Council,     Estimate     and 

apportionment,    etc. 
Bonds,  see  Debt. 
Boston,  expenditures  of,  186;  debt 

of,  295. 
Boulevards, '  the,'  established,  104, 

no;  recent  expenditures,  330. 
Bounties,  bonds  for,  in  Civil  War, 

102-104. 


Bribery,  penalties,  74, 354 ;  to  secure 
Ring  charter,  125,  126. 

Bridges,  bonds  issued  for,  147,  326, 
330,  332 ;  revenues  from  Brook- 
lyn, 230.  337- 

Broadway,  widening  'job,'  1870, 
144. 

Broadway  railway,  franchise  'job,' 
1884,  236 ;  percentage  paid  by, 
239- 

Brooklyn,  treatment  of  finances, 
vii ;  consolidation  with  New 
York,  166-168  ;  receipts  of,  179 ; 
personal  taxes  in,  195 ;  sinking 
fund,  319;  heavy  debt,  336. 

Brooklyn  bridge,  bonds  for,  147, 
326,  330  ;  revenues  from,  230,  337. 

Brouwer  Straate,  assessment  for 
paving,  12. 

Budget ;  see  Appropriations. 

Burgomasters  of  New  Amsterdam, 
appointment,  8  ;  financial  man- 
agement by,  9-1 1. 

Cabinet  government,  contrasted 
with   city   council,   278,   279. 

Central  Park,  control  by  state  com- 
mission, 78 ;  appropriations  for, 
84;  established,  bonds,  99,  100; 
improvement  under  Ring,  147 ; 
power  of  commission  as  to  streets, 
202;  bonds  for,  1871-1884,  326. 

Chamberlain,  office  established,  15  ; 
duties  prescribed,  1788,  26;  ap- 
pointment and  duties,  345,  346, 
348 ;  inspection  of  his  accounts, 

351.  353- 

Charitable  institutions,  private, 
rapid  increase  of  donations,  1850- 
1869, 114;  excise  revenues  go  to, 
256;  required  donations  to,  261 ; 
restrictions  on  appropriations  to, 
263  ;  increase  of  appropriations 
to,  293. 

Charities  and  correction,  depart- 
ment of,  established,  80 ;  expen- 


INDEX 


387 


ditures,  1860-1869,  82;  expendi- 
tures, 1871-1896,  293;  see  also 
Almshouse. 

Charter  of  New  York  city,  general 
history,  1-6 ;  first  Dutch,  8 ; 
English  royal,  13, 14  ;  convention 
of  1829,  42 ;  of  1830,  42-45  ;  con- 
vention of  1846,  67  ;  reorganiza- 
tion, 1849,  67-70;  amendments, 
1853,70-75;  reorganization,  1857, 
76,  77 ;  other  changes,  78-80 ; 
failure  of  proposed  convention, 
80;  complex  character,  1850- 
1869,114-118;  reorganization  by 
Tweed  Ring,  125-127 ;  proposed 
by  Committee  of  Seventy,  155- 
158 ;  reorganization,  1873,  159- 
161 ;  general  character  of  present, 
161-163;  amendments  since  1873, 
163-166 ;  of  Greater  New  York, 
168-172;  influence  on  finances, 
359;  unsystematic  development 
and  character,  360-362;  see  also 
Greater  New  York  charter. 

Chicago,  receipts  and  expenditures, 
179,  181,  186. 

Cities  (generally),  early  indepen- 
dence of  European,  7, 15  ;  receipts 
of  American,  179;  expenditures 
of  American,  186,  289  ;  franchises 
and  property,  224,  247 ;  proper 
function  of  council,  279-281 ; 
Tilden  commission  plan,  281- 
285 ;  limited  suffrage,  282-285  ; 
debts  of  American,  295 ;  consti- 
tutional limitations  on  debt,  296, 
300;  state  board  to  control  debt, 
300;  comparative  per  capita 
debts,  335. 

Citizens'  Association  of  New  York, 
influence  on  appropriations,  95  ; 
favors  legislative  commissions, 
117 ;  supports  Ring  charter, 
126. 

City  council,  see  Council. 

City  hall,  erection,  33. 


City  improvement  stock,  for  street 
openings,  no,  206,  326. 

Civil  War,  bonds  for  bounties  and 
riots,  102-104. 

Clow,  F.  R.,  classification  of  ex- 
penditures, 287. 

Coleman,  Michael,  tax  commis- 
sioner, 192,  194,  266,  271. 

Commissioners,  see  Accounts, 
commissioners  of.  Sinking  fund, 
Legislative  commissions,  etc. 

Committee  of  Seventy,  fight  against 
Tweed  Ring,  136;  propose  char- 
ter, 155-158  ;  influence  on  char- 
ter of  1873,  159,  160. 

Common  council,  see  Council. 

Comptroller,  office  established,  28  ; 
to  prepare  estimates,  46;  term 
four  years,  77 ;  appoints  chari- 
ties commissioners,  80;  added 
power  in  appropriations,  94,  97, 
127  ;  special  audits  by,  1868,  122 ; 
power  of  appointment  by,  127 ; 
member  board  of  estimate,  131; 
office  made  elective,  165 ;  con- 
trol of  contracts,  216,  355  ;  influ- 
ence in  board  of  estimate,  264, 
271 ;  election  and  functions,  345  ; 
must  sign  warrants,  348  ;  reports 
of,  vi,  351, 352;  j,?^  a/j^  Accounts, 
Finance  department.  Reports. 

Connolly,  Comptroller  Richard  B., 
becomes  Ring  member,  122; 
share  in  spoils,  129;  deposed, 
136. 

Consolidated  Gas  Company,  247. 

Consolidated  stock,  130,  312,  325. 

Consolidation,  see  Greater  New 
York. 

Constitution  of  New  York,  conven- 
tion of  1867,  79;  grants  local 
veto  of  bills,  165 ;  limits  railway 
franchises,  235 ;  limits  city  debt, 
296-300. 

Contracts  for  city  work,  council 
not  to  be  interested,  70;  restric- 


388 


INDEX 


tions  established,  74,  77;  weekly 
reports  of,  350  ;  officers  forbidden 
interest,  354;  how  let,  216,  355; 
unbalanced  bids  for,  355-357. 

Convention  on  city  charter,  1829, 
42;   1846,  67;  1862,  80. 

Cooper,  Peter,  as  reformer,  72,  95. 

Corporations,  loan  of  city  credit  to, 
prohibited,  296. 

Council,  common,  election,  etc., 
colonial,  15 ;  controls  entire  ad- 
ministration, 29,  37  ;  character  of 
administration,  38  ;  separation  of 
two  boards,  42 ;  attempt  to  re- 
move executive  power  from,  43, 
60;  executive  power  removed, 
69;  early  corruption,  61,  71; 
reorganization, '  councilmen  '  es- 
tablished, 1853,  73 ;  rearrange- 
ment of  districts,  77 ;  opposes 
legislative  interference,  86,  87 ; 
proposed  restoration  of  power, 
156;  minority  representation, 
161 ;  failure  and  abandonment 
of  same,  163,  164;  composed  of 
one  board,  161 ;  growing  weak- 
ness, 164 ;  reorganization  as 
'  municipal  assembly,'  1897,  168  ; 
remission  of  taxes  by,  188  ;  power 
in  special  assessments,  202,  203, 
205,  216;  street  railway  'jobs,' 
236 ;  appropriations  submitted 
to,  255,  256  ;  appropriating  power 
under  charter  of  1897,  257,  278 ; 
present  lack  of  power  or  inter- 
est, 258-261 ;  proper  sphere  in 
government,  279-281 ;  property 
qualification  in  Germany,  288 ; 
has  now  no  control  of  debt,  301 ; 
debt  power  under  new  charter, 
305 ;  prohibited  interest  in  con- 
tracts, 354. 

Councilmen,  board  of,  name  estab- 
lished, 73. 

Counsel  to  the  corporation,  made 
member  of  board  of  estimate,  254. 


'  County  liabilities,'  fraudulent  pay- 
ments, 128,  135. 

County  of  New  York,  government 
separated  from  city,  78  ;  growth 
of  expenditures,  85,  86 ;  court 
house,  102,  141,  142,  147 ;  war 
bonds  of,  103  ;  consolidated  with 
city,  126,  153. 

County  supervisors,  taxes  levied  by 
aldermen  as,  28  ;  separate  board, 
78,  85;  Ring  formed  by,  120; 
abolished,  126. 

Court  house,  county,  commenced, 
102;  Ring  frauds  in,  141,  142, 
147 ;  criminal,  303. 

Courts,  expenditures  for,  31,  114, 
293 ;  control  of  street  openings, 
214,  215  ;  decision  as  to  transfer 
of  appropriations,  268 ;  as  to 
debt  limit,  298 ;  mandamus  to 
compel  debt  payment,  309. 

Croton  aqueduct,  construction,  52- 
54 ;  management  and  revenues, 
224-226;  construction  of  new, 
326-328 ;  see  also  Water  supply. 

Debt  of  New  York  city,  for  forti- 
fications, 1653,  9 ;  for  docks, 
1676,  20 ;  floating,  eighteenth 
century,  24;  first  permanent,  1812, 
33 ;  history  to  1830,  33-37  ;  1830- 
1850,51-57;  for  aqueduct,  52-54 ; 
funding  floating,  56 ;  proposal 
to  require  vote,  68 ;  1850-1868, 
97-106;  for  Central  Park,  99, 
loi ;  for  war  purposes,  102- 
104;  funding  floating,  i860,  102; 
assessment  bonds  introduced, 
108 ;  increase  in  annual  charges 
for,  113,  114;  for  'adjusted 
claims,"  etc.,  under  Ring,  122, 
124,  130;  progress  imder  Ring, 
145-149 ;  manner  of  calculating 
charges,  186;  purpose  of  revenue 
bonds,  189,  267 ;  provisions  as 
to   assessment   bonds,  209,  211, 


INDEX 


389 


216 ;  fixed  charges  in  budget, 
261,  263;  reduction  in  budget 
charges,  267 ;  payments  for  in- 
terest and  sinking,  287,  290  ;  con- 
stitutional limitations,  296-300; 
effect  of  consolidation,  299;  leg- 
islative control  of  creation,  300, 
301 ;  control  by  local  authorities, 
302,  303 ;  exemption  from  taxa- 
tion, 303 ;  control  under  Greater 
New  York  charter,  304,  305  ;  re- 
cent changes  in  sinking  fund 
system,  306-318;  general  prog- 
ress since  1871,  319-325  ;  interest 
rate,  322 ;  temporary  debt,  323 ; 
chief  bond  issues  since  1871,325- 
332 ;  present  state,  333-336 ;  com- 
parison with  other  cities,  335 ; 
tables  of,  374,  375,  379 ;  diagram, 
381. 

Deficiencies,  taxes  for,  50 ;  funding 
of,  30,  56,  102;  percentage  to 
cover,  no,  189,  200. 

Democratic  party,  first  gains 
power,  39 ;  in  Croton  aqueduct 
board,  53;  abuses  by,  1850-1860, 
76;  opposes  legislative  control, 
86 ;  secures  majority  in  legislat- 
ure, 125 ;  division  in  party,  125, 
126;  two  wings  of,  271;  control 
of  board  of  estimate,  271. 

Departments,  executive,  appoint- 
ment by  council,  37  ;  attempt  to 
establish  independent,  43,  60; 
established  by  law,  69  ;  appointed 
by  mayor,  'ji ;  certain,  governed 
by  state  commissions,  78,  79; 
term  four  years,  80 ;  power  of 
independent,  81-87;  lobbying  as 
to  tax'  laws,  95 ;  under  Tweed 
charter,  127;  proposed  minority 
representation  in,  157 ;  council 
to  confirm  appointments,  160; 
appointment  and  removal  by 
mayor  alone,  165,  168,  172 ;  bi- 
partisan boards,  165 ;    estimates 


of  appropriations,  254,  265;  dis- 
tinction of  functions  from  legisla- 
tive, 279;  audit  of  bills  by,  347; 
reports  of,  350;  investigations 
into,  353. 

Depositories  of  city  moneys,  346. 

Docks  and  wharves,  established 
by  Dutch,  11 ;  grant  of  lands  for, 
19  ;  revenue  from,  55,  75  ;  bonds 
issued  for,  98  ;  reorganization  of 
department,  1870,  128 ;  present 
management  and  revenue,  227- 
229 ;  issue  of  bonds  for  all  ex- 
penditures, 257,  300 ;  bonds  since 
1871,  326,  332. 

Donations  to  private  institutions, 
114,  256,  261,  263,  293. 

Dongan,  Governor  Thomas,  char- 
ter and  grants,  13. 

Draft  riots,  1863,  bonds  for,  103. 

Dutch,  finances  under  rule  of,  7-13. 

Edson,  Mayor  Franklin,  opinion 
as  to  debt  limit,  298. 

Education,  see  Schools. 

Elections,  early  partisanship  in,  39, 
62 ;  proposed  requirement  for 
bond  issues,  68 ;  Ring  frauds, 
123 ;  on  consolidation  question, 
166;  reduction  of  estimates  to 
influence,  276. 

Elevated  railways,  franchises  and 
profits,  244-246. 

England,  early  city  charters  in,  7, 
15  ;  early  special  assessments,  23  ; 
sinking;  fund  fallacy,  35 ;  water 
supply  in  cities,  224;  municipal 
gas  plants,  247,  248 ;  success  of 
city  councils,  280;  limited  mu- 
nicipal suffrage,  284 ;  state  control 
of  local  debt,  300. 

Equitable  Gaslight  Company,  246. 

Estimate  and  apportionment,  board 
of,  established,  131;  first  action, 
132-134;  reconstituted,  152; 
composition  and  duties,  253-256 ; 


390 


INDEX 


under  Greater  New  York  charter, 
257 ;  disregard  of  council's  ac- 
tion, 258 ;  complaint  of  fixed 
appropriations,  261-263  '<  practi- 
cal procedure,  264-267 ;  transfer 
appropriations,  267-269 ;  charac- 
ter, partisan  motives,  etc.,  269- 
277  ;  meagre  reports  of  meetings, 
274 ;  anomaly  of  system,  278 ; 
control  of  debt  issues,  302,  305. 

European  cities,  see  England,  Ger- 
many, Paris. 

Ewen,  Comptroller  John,  on  addi- 
tional appropriations,  49. 

Excise  licenses  for  liquor  trafific, 
management  by  Dutch,  9,  10; 
grant  by  English  governor,  18  ; 
receipts  from,  182,  184;  appro- 
priation of  moneys  from,  256,  286. 

Executive,  j-tff  Mayor,  Departments. 

Expenditures,  compared  with  state 
and  United  States,  vi ;  character, 
colonial  period,  22,  23,  25 ;  in- 
crease of  to  1869,  30,  64,  82-86, 
112-114;  effect  of  inflated  cur- 
rency, 113;  juggling  by  Tweed 
Ring,  138-140  ;  present,  how  cal- 
culated, 186;  compared  with 
other  cities,  186;  analysis  for 
1896,  285-289  ;  fixed  and  contin- 
gent, 287;  increase  since  1871, 
289-292 ;  see  also  Appropriations. 

Fees,  importance  under  Dutch,  10; 
present  receipts,  182;  paid  into 
city  treasury,  354. 

Ferries,  privilege  secured,  18 ;  in- 
creased revenue,  75 ;  present 
management  and  revenue,  230- 
232. 

Final  estimate,  requires  unani- 
mous vote,  254;  how  fixed,  255; 
changes  from  provisional  esti- 
mate, 258-261,  265,  266;  legisla- 
tive changes  after"  adoption,  267; 
see  also  Appropriations. 


Finance,  board  of,  proposed  by 
Tilden  commission,  282. 

Finance  department,  organization 
and  duties,  345-349;  records  and 
reports,  349-352 ;  see  also  Ac- 
counts, Comptroller,  Reports. 

Finances  of  New  York  city,  impor- 
tance of,  v ;  outline  of  history, 
1-6;  outline  of  system,  172-177; 
unsystematic  development,  360; 
need  of  reforms,  362. 

Fines,  receipts  from,  182. 

Fire  department,  Dutch  taxes  for, 
II;  expenditures,  1830,  31;  paid 
department,  under  state  commis- 
sion, 79;  expenditures  to  1869, 
85;  pension  fund,  256;  growth 
of  expenditures,  288,  292. 

Fire  of  1835,  bonds  for  aid,  56. 

Flagg,  Comptroller  A.  C,  advo- 
cates reforms,  71. 

Floating  debt,  in  colonial  days,  9, 
24;  funding  of,  30,  56,  102,  124, 
130,  209,  325 ;  see  also  Assess- 
ment bonds.  Revenue  bonds. 

Fortifications,  construction,  1653,  9. 

Fourth  Avenue,  railway  depressed, 

153- 

Franchises,  municipal,  abuses, 
1850-1852,  71 ;  regulations  on 
grant,  73,  74;  summary  of  reve- 
nue from,  183, 185  ;  importance  of 
revenue,  222-224  '■  general  man- 
agement, etc.,  230-252  ;  for  fer- 
ries, 230-232 ;  street  railways, 
232-246 ;  lighting  works,  etc.,  246, 
247 ;  in  foreign  cities,  248 ;  re- 
cent movement  for  reform,  249- 
252. 

Fraud,  penalties  for,  354;  now 
limited  in  extent,  355. 

Freemen,  limitation  of  rights  to,  16. 

Garvey,  A.  J.,  payments  to,  141. 
Gas     plants,      franchises,     profits, 
municipal  plants,  etc.,  246-249. 


INDEX 


391 


General  fund,  eslablished,  transfers 
to,  loi ;  revenues,  181 ;  how  re- 
ceipts estimated,  256. 

Germany,  municipal  waterworks 
in,  224;  municipal  gas  plants, 
249;  property  suffrage,  284. 

Governor,  state,  appointment  of 
mayor  by,  15 ;  of  police  com- 
missioners, 79 ;  approval  of  re- 
movals, 162. 

Grace,  Mayor  W.  R.,  vetoes  fran- 
chises, 236,  240;  appropriations 
under,  261,  275;  opinion  as  to 
debt  limit,  298. 

Grant,  Mayor  H.  J.,  board  of  esti- 
mate under,  271. 
Greater  New  York,'  effect  of  con- 
solidation on  finances,  vii ;  his- 
tory of  consolidation,  166-168 ; 
charter  of,  168-172;  estimated 
receipts,  179  ;  estimated  debt,  336. 

'  Greater  New  York '  charter,  his- 
tory and  character,  166-172 ;  as- 
sessment enterprises  under,  203- 
205 ;  budget  system,  257,  277- 
281 ;  control  of  debt  issues,  304, 
305 ;  sinking  fund  provisions, 
318;  audit  system,  349;  financial 
reports,  352  ;  unsystematic  char- 
ter, 360,  361. 

Green,  Comptroller  A.  H.,  instal- 
lation, 1871, 136;  reforms  by,  150, 
151 ;  member  Greater  New  York 
commission,  166. 

Greenwich  Street  Elevated  Rail- 
way, 244. 

Hall,  Mayor  A.  O.,  lobbying  as  to 
tax  law,  95 ;  election,  123 ;  prob- 
able share  in  frauds,  129;  mes- 
sage of  1871,  131. 

Harlem  River,  expenditure  for 
bridges,  330. 

Havemeyer,  Mayor  VV.  F.,on  party 
influences,  63  ;  proposes  charter 
reforms,  159. 


Haws,  Comptroller  Robert  T.,  re- 
forms by,  90,  III. 

Health  department,  under  state 
commission,  79,  84. 

Heere  Gracht,  assessment  for  pav- 
ing, 12. 

Hewitt,  Mayor  A.  S.,  appropriations 
under,  275  ;  condemns  aqueduct 
board,  327. 

Hoffman,  Governor  John  T.,  elec- 
tion, 123;  vetoes  charter  of 
Seventy,  158. 

'  Home  rule '  for  cities,  165,  169. 

Ingersoll,  J.  A.,  payments  to,  142. 

Inflation  of  currency,  1862-1869, 
113. 

Interest,  on  city  debt,  rapid  increase, 
1850-1869,  113;  high  rates,  104, 
149;  fixed  charge  in  budget,  261, 
263 ;  amount  of  expenditures, 
287,  290;  reduction  in  rate  since 
1871,  321,  322. 

Interest  on  taxes  and  assessments, 
181,  200;  on  city  deposits,  346. 

Interest, '  sinking  fund  '  for,  estab- 
lished, 55 ;  transfer  of  surplus, 
loi ;  surplus  goes  to  redemption 
fund,.  310;  pays  interest  on  re- 
demption fund  bonds,  317 ;  re- 
ceipts, 1896,  338. 

Judgments,  abuse  of,  91,  92. 
Judiciary,  expenditures  for,  114,292. 

Kelly,  Comptroller  John,  proposes 

sinking  fund  law,  308. 
Keyser  &  Co.,  payments  to,  142. 
Kings  county,  debt  of,  336. 

Lands,  grants  by  royal  governors, 
18,  19;  income  from,  34,  55,  226. 

Leases,  regulations  for  granting,  73, 
226. 

Legislative  commissions,  estab- 
lished for  certain  city  depart- 
ments, 78-80 ;  control  of  expen- 


392 


INDEX 


ditures  by,  83-85 ;  criticism  of, 
115-118;  abolished,  126. 

Legislature  of  New  York,  early 
control  of  taxation,  20,  27;  parti- 
san interference  in  city  charter, 
77,78,  80;  commissions  for  city 
affairs, 78-80, 115-118, 126  ;  direct 
interference  in  appropriations, 
88-97;  becomes  tool  of  Tweed, 
119;  local  disapproval  of  bills, 
165  ;  franchises  granted  by,  234, 
245 ;  present  influence  on  appro- 
priations, 261-263 ;  detailed  con- 
trol of  debt,  300,  301 ;  loses  con- 
trol of  debt  under  new  charter, 
304;  investigations  of  city  de- 
partments, 353. 

Licenses,  general,  receipts  from, 
182 ;  theatrical,  256 ;  see  also  Ex- 
cise licenses. 

Lighting,  public,  first  taxes  for, 
1761,25;  expenditures,  1798,  30 ; 
1830,  31 ;  franchises  for,  246. 

Long  Island  city,  consolidated  with 
Nevif  York,  167. 

Lotteries,  public,  as  source  of  reve- 
nue, 24. 

Low,  Seth,  member  of  charter  com- 
mission, 168. 

Manhattan  Elevated  Railway  Com- 
pany, 245. 

Markets,  granted  to  city,  18;  reve- 
nues from,  36,  37,  227. 

Mayor,  appointed  by  governor,  15  ; 
by  council,  38  ;  elected  by  people, 
42;  given  veto,  42,  73;  to  ap- 
point officers,  77 ;  added  power 
as  to  appropriations,  94,  97,  127; 
limited  power  under  Tweed  char- 
ter, 127;  member  of  board  of 
estimate,  131 ;  power  of  appoint- 
ment and  removal,  156,  161,  165, 
168,  172;  disapproval  of  legisla- 
tive acts,  165  ;  veto  on  appropria- 
tions, 257  ;  influence  in  board  of 


estimate,  270,  273  ;  vote  as  to  city 
depositories,  346;  countersigna- 
ture of  warrants,  348 ;  controls 
commissioners  of  accounts,  352, 
353  ;  may  investigate  officers,  354. 

Mercein,  Comptroller  Thomas  R., 
proposes  sinking  fund,  34. 

Metropolitan  board  of  health,  79, 84. 

Metropolitan   fire   department,  79 

85. 

Metropolitan  police  district,  79,  83, 
84. 

Metropolitan  Street  Railway  Com- 
pany, 237,  241-243. 

Ministers,  public  support,   10,   21, 

25- 

Minority  representation,  in  county 
supervisors,  78 ;  proposed  by 
Seventy,  157, 158  ;  introduced  for 
council,  161 ;  abandoned,  163, 
164. 

Montgomerie  charter,  14. 

Morris,  Mayor  Robert  H.,  charges 
against  council,  48,  60. 

Museums,  expenditures  for,  330. 

Natural  History,  Museum  of,  330. 
New  Amsterdam,  finances  of,  7-13. 
New  York  city,  outline  of  history, 

1-6;  consolidation,  166-168 ;  see 

also  Charter,  Greater  New  York 

charter. 
New  York  county,  see  County  of 

New  York. 
New  York  Printing  Company,  140. 
New    York    state,    see    Governor, 

Legislature,  State. 
New    York    Times,   exposes    Ring 

frauds,  135. 
Netu   York    Transcript,   Ring  pay- 
ments to,  139. 
Newspapers,   favor    Tweed    Ring, 

123  ;     unsatisfactory     study    of 

finances,  276,  343. 
Nicolls,  Colonel   Richard,  charter 

and  grants  by,  13,  18. 


INDEX 


393 


O'Brien,  James,  heads  Young  De- 
mocracy, 125  ;  exposes  Ring 
frauds,  135. 

O'Brien  &  Clark,  aqueduct  con- 
tracts let  to,  327. 

Officers,  city,  investigations  of,  354 ; 
prohibited  interest  in  contracts, 
etc.,  354 ;  see  also  Appointments, 
Departments. 

Opening  streets,  see  Street  open- 
ings. 

Paris,  great  city  debt,  300. 

Parks,  Central,  established,  99,  100 ; 
control  of  Central,  78,  84;  im- 
provement under  Ring,  147 ; 
power  of  department  as  to  streets, 
202  ;  assessments  for,  206,  213  ; 
apparent  rapid  increase  in  ex- 
penditure, 294 ;  recently  estab- 
lished, bonds,  298,  330,  332. 

Parliamentary  government,  study 
of  appropriations  in,  264,  265 ; 
contrasted  with  New  York  coun- 
cil, 278. 

Party  politics,  influence  in  city, 
1800-1850,  39,  62;  in  Croton 
aqueduct,  53;  during  war  time, 
76-80 ;  present  influence  in  bud- 
get, 270-276;  in  debt  control, 
301 ;  in  new  Croton  aqueduct, 
326  ;  in  charter  history  generally, 

359- 

Pavements,  assessments  for,  216 ; 
see  also  Streets. 

Paymaster,  city,  duties,  349. 

Personal  property,  evasion  of  taxes, 
190-195. 

Philadelphia,  expenditures,  186. 

Police  department,  early  'watch,' 
II,  21,  23,  30,  31;  appointed  by 
council,  62;  by  ex  officio  board, 
74;  rapid  increase  of  expendi- 
ture, 64 ;  control  by  state  com- 
mission, 79,  83,  84;  grounds  for 
state    control,    117;    bi-partisan 


board,  165;  pension  fund,  256; 
number  and  pay  fixed,  261 ; 
appropriations  for,  287,  292; 
monthly  payments  to,  348. 

Poor  relief,  early  taxes  for,  21 ;  see 
also  Charities  and  correction. 

President  of  the  aldermen,  elective 
office,  165 ;  member  of  board  of 
estimate,  162,  253 ;  influence  of, 
274. 

Printing  and  advertising,  abuse  of 
transfers  for,  91 ;  judgments  for, 
91 ;  Ring  expenditures,  114,  139. 

Provisional  estimates,  procedure, 
254,  257,  260 ;  great  changes  in 
final  estimates,  258,  265,  266;  re- 
duced to  influence  elections,  276, 
277. 

Public  buildings,  loans  for,  56,  57, 
98,  332- 

Public  drives,  bonds  for,  104,  no, 
330. 

Public  improvements,  see  Public 
works.  Streets. 

Public  improvements,  board  of,  es- 
tablished by  charter  of  1897,  170; 
power  in  assessment  enterprises, 
294;  in  debt  control,  305. 

Public  works,  autonomy  of  Greater 
New  York,  169. 

Public  works  department,  commis- 
sioner member  board  of  estimate, 
131,  152;  power  as  to  assess- 
ments, 203,  207,  216 ;  transfers  of 
appropriations  for,  268,  269 ;  ex- 
penditures of,  287,  294 ;  power  to 
authorize  bonds,  302 ;  collects 
water  rents,  346  ;  unbalanced 
bids  for  contracts,  357. 

Railways,  street,  early  franchises 
and  abuses,  71,74;  summary  of 
franchises  and  revenues, 232-243  ; 
taxes  on,  243  ;  elevated,  244,  245  ; 
in  Europe,  248  ;  proposed  under- 
ground, 249. 


394 


INDEX 


Rapid  transit,  act  of  1875,  244 ;  pro- 
posed underground  system,  249. 

Real  estate,  early  grants  to  city,  18, 
19 ;  early  rents  and  sales,  34,  36, 
55 ;  taxation  of,  187,  190,  195- 
197;  present  revenue  from,  226. 

Receipts,  summary  of,  177-185  ;  see 
also  Revenues. 

Receiver  of  taxes,  189. 

Repaving  streets,  not  at  expense  of 
owner,  216 ;  bonds  for,  330. 

Reports,  financial,  use  in  citations, 
vii ;  reorganization  of  system, 
1859,  hi;  confusion  of,  342; 
requirements  and  character,  349- 
352;  need  of  simplifying,  363. 

Republican  party,  interferes  in  city, 
76,78;  adopts  charter,  1873,155, 
159 ;  deal  as  to  aqueduct  board, 

327- 

Revenue  bonds,  increase  and  fund- 
ing, 56,  57,  102;  for  'adjusted 
claims '  under  Ring,  122,  124, 
130;  funding,  124,  130,325;  pur- 
pose of,  189,  267 ;  not  included 
in  debt  limit,  297 ;  issued  under 
general  law,  300 ;  recent  reduc- 
tion in  amount,  323. 

Revenues  (generally),  Dutch  pref- 
erence of  indirect,  9, 10  ;  English 
grants  of  indirect,  18 ;  impor- 
tance, 19 ;  indirect,  1798-1830, 
30,  31 ;  summary  and  classifica- 
tion of  present,  177-185 ;  from 
property  and  franchises,  221-252 ; 
lack  of  unified  management,  255  ; 
rapid  increase  of  indirect,  338. 

Riots,  caused  by  war  draft,  103. 

Robinson,  Governor  L.,  vetoes  sink- 
ing fund  bill,  308. 

Salaries,  many  fixed  by  law,  261 ; 

instead  of  fees,  354. 
Ac/iC^^'w^^,  construction,  1655,  11. 
Schoolhouses,  bonds  for,  330,  331. 
Schools,  public,  expenditures,  1798, 


30;  1830,31;  rapid  increase,  64  ; 
independence  of  department,  81 ; 
expenditures,  82 ;  moneys  re- 
ceived from  state,  256;  appropri- 
ations to  sectarian,  prohibited, 
263 ;  increase  of  appropriations 
since  1871,  287,  293;  bonds  for 
buildings,  330,  331. 

Seventy,  Committee  of,  fight  against 
Tweed  Ring,  136  ;  propose  char- 
ter, 155-158 ;  influence  charter 
of  1873,  159,  160. 

Sewers,  assessments  for,  216. 

Sharp,  Jacob,  Broadway  railway 
franchise,  71. 

Sidewalks,  assessments  for,  216. 

Sinking  fund,  established,  1813,33- 
36  ;  amount,  1830,  37  ;  separation 
of  interest  and  redemption  funds, 
etc.,  1844,  55  ;  transfer  of  surplus 
of  interest  fund,  100,  101 ;  rapid 
increase  to  1870,  106;  slow  in- 
crease under  Ring,  149;  pay- 
ments to,  classed  as  current  ex- 
penditures, 286;  deducted  in 
fixing  debt  limit,  298  ;  unneces- 
sary accumulations, 307;  extended 
applicability,  1878,  308-313; 
transfer  of  interest  to  redemption 
fund,  311 ;  cancellation  of  bonds 
in.  313.  314;  further  extension  of 
applicability,  etc.,  1889,  316-318  ; 
system  under  new  charter,  318, 
319;  increase  since  1871,  323; 
amount  and  classes,  1896,  334 ; 
rapid  increase  of  revenues,  338  ; 
probable  future  capacity,  339 ; 
crudity  of  system,  340-342;  con- 
fuses taxpayers,  342-344. 

Sinking  fund  commissioners,  es- 
tablished, 34;  control  of  property 
and  franchises,  224,  226,  229; 
control  of  docks,  229,  257;  gen- 
eral debt  control,  313. 

Special  assessments  for  local  im- 
provements, use  by   Dutch,  12; 


INDEX 


395 


first  colonial  law,  English  influ- 
ence, 23,  24  ;  increased  use,  32  ; 
for  street  openings,  32 ;  amount, 
etc.,  1830-1840,  58,  59;  amount, 
1850-1870,  107 ;  bonds  first  is- 
sued for  anticipating,  108  ;  vaca- 
tions of,  108,  109 ;  board  of 
revision  established,  109;  Ring 
frauds  in,  142-145 ;  vacations, 
144 ;  present  system,  201-220 ; 
authorization  of  enterprises,  201- 
203 ;  authorization  under  new 
charter,  204,  205;  losses  from, 
and  funding  of  bonds,  206-210; 
special  funds  for,  211-213;  pro- 
cedure, street  openings,  213-215 ; 
street  improvements,  216-219 ; 
collection,  219;  annual  amount, 
etc.,  220,  285  ;  tables,  372,  373. 

Special  and  trust  accounts,  defini- 
tion, 173. 

Speedway,  bonds  for,  330. 

State  assessors,  action  as  to  city 
assessments,  196. 

State  of  New  York,  expenditures, 
V ;  bonds  for  deficiency  in  sink- 
ing funds,  153,  325  ;  see  also  Leg- 
islature, Legislative  commissions. 

State  taxes,  first  levied,  65;  levy 
of,  196,  197 ;  fixed  charge  in  city 
budget,  261 ;  suits  to  reduce  city 
apportionment,  266;  not  proper 
city  expenditure,  286;  amount, 
1896,  287 ;  amount  since  1871, 
290. 

States,  American,  expenditures,  v; 
debt,  295. 

Steam  heating,  franchises  for,  246. 

Street  cleaning,  expenditures,  1830, 
31 ;  transfers  of  appropriations 
for,  90  ;  judgments  for,  1865,91, 
92 ;  transfers  for,  269 ;  increase 
of  appropriations,  293. 

Street  opening  and  improvement, 
board  of,  203,  214. 

Street  openings,  assessments   first 


levied  for,  32;  assessments  lim- 
ited, no;  bonds  for  city's  share, 
no,  143,  206,  326;  how  author- 
ized, 202-204 ;  when  cost  borne 
by  city,  206;  fund  for,  212;  as- 
sessment procedure,  213-215 ; 
amount  of,  220. 

Street  railways,  first  franchises,  71, 
74;  summary  of  franchises  and 
revenues,  232-243,  337 ;  over- 
capitalization, 239-243 ;  Metro- 
politan company,  241-243 ;  taxes 
on,  243  ;  elevated,  244,  245 ;  in 
Europe,  248  ;  underground  pro- 
posed, 249. 

Streets,  early  assessments  for  im- 
proving, 12,  23,  32 ;  rapid  im- 
provement, 1830-1840,  58,  59; 
1850-1870,107-110;  Ring  frauds 
in  improving,  142-145 ;  authori- 
zation of  improvements,  202-205; 
losses  on  assessments,  207-210 ; 
special  fund  for  improvement, 
211-213;  assessment  procedure, 
213-219;  amount  paid  for  im- 
proving, 220;  limit  of  repaying 
appropriation,  263 ;  bonds  for 
repaying,  330,  331 ;  bonds  since 
1871,  332;  unbalanced  bids  for 
grading,  356. 

Strong,  Mayor  W.  M.,  vetoes  new 
charter,  167,  168  ;  increase  of  ap- 
propriations under,  275,  293,  294. 

Stuyvesant,  Peter,  domination  by, 

8,9- 

Suffrage,  municipal,  early  limita- 
tions, 16,  17 ;  advisability  of 
limiting,  282-285. 

Supervisors  of  New  York  county, 
aldermen  act  as,  28 ;  separate 
board  established,  78,  85  ;  Ring 
formed  by,  120;  abolished,  126. 

Supreme  court,  control  of  street 
openings,  214,  215. 

Sweeney,  Peter  B.,  becomes  Ring 
member,    121 ;    share   of  spoils 


396 


INDEX 


129 ;  device  as  to  accounts,  129 ; 
president  of  park  department, 
127. 

Tammany  hall, reorganization,  121 ; 
wins  election  of  1868,  123 ;  op- 
position of  Young  Democracy, 
125 ;  secures  charter  of  1870, 126 ; 
representation  on  board  of  esti- 
mate, 270,  271 ;  false  economy, 
275 ;  delusive  reduction  of  bud- 
get, 277. 

Tax  laws,  required  annually,  27 ; 
drafted  by  council,  46 ;  used  as 
means  of  state  interference,  88- 
96 ;  juggling  under  Tweed  Ring, 
128-132 ;  system  abandoned,  152, 

153- 

Taxes,  first  under  Dutch,  10 ;  slight 
use  in  early  days,  20,  21 ;  date  of 
collection,  26 ;  annual  laws  re- 
quired, 27  ;  how  levied,  28  ;  rate, 
1798,  1830,  31;  1830-1850,  65; 
penalty  for  non-payment,  1850, 
no;  deficiencies  in,  III ;  limited 
to  2%,  1871, 131 ;  general  system, 
187-200;  levy,  189,  255;  assess- 
ment, 187-198  ;  evasion  of  person- 
alty, 190-195 ;  state  assessment, 
196,  197 ;  collection,  189,  198- 
260 ;  on  street  railways,  243, 245 ; 
interest  on,  256;  variability  in 
rate,  275 ;  false  arguments  from 
rate,  276 ;  rights  of  non-taxpayers, 
283  ;  city  bonds  exempt,  303  ; 
changes  as  to  debt  service,  308- 
313.  315-317;  tables,  372,  373; 
diagram,  380. 

Taxes,  receiver  of,  189. 

Taxes  and  assessments,  department 
of,  187, 190, 196 ;  president  mem- 
ber of  board  of  estimate,  162,  253. 

Taxpayers,  hearing  on  appropria- 
tions, 255 ;  proposed  limitation 
of  suffrage  to,  282-285  ;  may  in- 
vestigate accounts,  354. 


Telephone  lines,  franchises  for,  246. 

Third  Avenue  Railway,  237,  238. 

Tilden  commission,  plan  of  finance 
control,  281-285. 

Tilden,  Governor  Samuel  J.,  fight 
against  Tweed  Ring,  136. 

Transfers  of  appropriations,  abuse 
of,  90;  prohibited,  91;  reestab- 
lished, recent  working,  267-269. 

Trust  accounts,  definition,  173. 

Tweed  Ring,  origin  and  growth, 
120-123 ;  secures  charter,  125- 
127 ;  juggling  with  debt  and 
budget,  128-134 ;  fall,  134-137  ; 
summary  of  frauds,  138-142; 
special  assessments  under,  142- 
145 ;  increase  of  debt,  145-149. 

Tweed,  William  M.,  early  career, 
120;  organizes  Ring,  122;  se- 
cures charter,  126 ;  commissioner 
of  public  works,  127 ;  auditing 
frauds,  128 ;  member  board  of 
estimate,  131;  punishment,  137. 

Twenty-third  and  twenty-fourth 
wards,  street  improvements  in, 
203,  219,  220. 

Unbalanced  bids  for  contracts,  356. 

Unexpended  balances,  transfers  of, 
90,  91,  267-269. 

United  States  constitution,  influ- 
ence on  city  charter,  42,  45. 

Vacation  of  assessments,  law  au- 
thorizing, 1858, 108  ;  under  Tweed 
Ring,  144;  in  recent  times,  208, 
210. 

Vanderbilt,  William  H.,  taxation  of 
estate,  194. 

Vestrymen,  taxes  collected  by,  21, 

25- 
Vouchers,  requirements  of,  347. 

War,  Civil,  bond  issues  caused  by, 

102-104. 
Warrants,  how  drawn,  348. 


INDEX 


397 


Watch,  night,  Dutch  taxes  for,  ii; 
expenditures,  1798,  30;   1830,  31. 

Water  supply,  first  aqueduct,  52- 
54;  rents  from,  55;  improve- 
ments, 1850-1870,  98 ;  bonds 
issued  by  Tweed  Ring,  147 ; 
present  management  and  reve- 
nues, 224-226 ;  limit  of  appropri- 
ation for  mains,  263 ;  judgment 
for  meters,  291 ;  effect  of  debt 
limit,  297 ;  control  of  bond  issues 
for,  300,  301,  302;  separate  sink- 
ing   fund    for,    317,   318 ;    bond 


issues  since  1871,  325,  332;  con- 
struction of  new  aqueduct,  326- 
328. 

Watson,  James,  county  auditor, 
122;  part  in  Ring  frauds,  129. 

West  India  Company,  relation  to 
city,  8. 

Wharves,  built  by  assessment,  32 ; 
see  also  Docks. 

Wood,  Mayor,  disloyal  utterances, 
117. 

Young  Democracy,  125,  126. 


A  POLITICAL  PRIMER 

OF 

NEW  YORK  STATE  AND  CITY. 

(^The  City  utider  the  Greater  Xeiu  York  Charter.) 

By  ADELE  M.   FIELDE, 

Secretary  of  the  League  for  Political  Education,  Author  of 
"  A  Corner  of  Cathay,"  etc.,  etc. 

Flexible  cover,  pocket  size.    Price  75  cents. 


Fully  illustrated  with  Maps  as  follows  :  — 

Map  of  the  State  of  New  York,  showing  Counties. 

The  Senate  Districts  of  New  York  State. 

The  Senate  Districts  of  New  York  County. 

The  Senate  Districts  of  Kings  County. 

New  York  City,  showing  the  Five  Boroughs. 

The  Council  Districts  of  New  York. 

Wards  of  the  Borough  of  Manhattan. 

Wards  of  the  Borough  of  Brooklyn. 

The  Judicial  Districts  of  New  York  State. 

The  Municipal  Court  Districts  of  Manhattan  and  the  Bronx. 

The  Municipal  Court  Districts  of  Brooklyn. 

The  Congressional  Districts  of  New  York  State. 

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MUNICIPAL    PROBLEMS. 


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11 V 

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THE  AMERICAN  COMMONWEALTH. 

BY   THE 

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"  The  most  trustworthy  and  helpful  guide  to  a  historical 
and  critical  knowledge  of  our  political  character  and  life 
in  the  eyes  of  the  public."  —  The  Literary  World,  Boston. 


Abridged  Edition  for  Students'  Use. 

Revised  by  Mr.  Bryce,  with  the  assistance  of  Prof.  Jesse 
Macy,  of  Iowa  College.  This  is  not  a  mere  condensation 
of  the  larger  work,  but  a  restatement,  briefer  and  in  a  form 
more  carefully  adapted  to  use  as  a  text-book,  of  the  valuable 
material  in  Mr.  Bryce's  "  American  Commonwealth,"  a 
knowledge  of  which  is  conceded  to  be  indispensable  to  any 
one  who  would  acquire  a  just  estimate  of  American  Insti- 
tutions. 

Large  i2mo.    Cloth.    Price,  $1.75,  net. 


THE    MACMILLAN    COMPANY. 

QQ   FIFTH  AVENUE,  NEW   YORK. 


AN  OUTLINE  FOR  THE  STUDY 

OF  ^ 

CITY  GOVERNMENT, 


DELOS  H.  WILCOX,   Ph.D., 

of  Columbia  I  'iiiversity. 
i2mo.    Cloth.    $1.50,  net. 

The  author  holds  that  the  City  problem  is  the  key  to 
the  immediate  future  of  social  progress  in  this  country, 
and  he  offers  for  the  first  time  a  systematic  outline  for 
the  study  of  the  whole  municipal  field,  indicating  the 
chief  problems  in  order,  with  facts  and  illustrations  suffi- 
cient as  a  basis  for  intelligent  interest  and  a  guide  to  the 
sources  of  further  information.  He  discusses'  in  turn 
problems  of  function,  of  control,  and  of  organization,  and 
his  book  will  be  very  useful,  not  only  to  students  in  col- 
leges and  secondary  schools,  but  even  more  to  any  class 
of  citizens  who  are  interested  in  the  betterment  of  muni- 
cipal conditions  through  the  development  of  intelligence 
and  the  sense  of  civic  responsibility. 


THE   MACMILLAN    COMPANY, 

66   FIFTH   AVENUE,  NEW   YORK. 


/' 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


AA    001  194  077    2 


2i 


§^^^. I 


